Upload
ankit-patel
View
216
Download
4
Embed Size (px)
Citation preview
A SUMMER INTERNSHIP PROJECT REPORT
ON
RATIO ANALYSIS
OF ANUPAM INDUSTRIES LTD.ANAND
Submitted for the partial fulfillment of
Master of Business Administration (MBA) (2010-12)
Gujarat Technological University- Ahmedabad
Submitted By:
Ankit B. Patel
MBA-II (2010-2012)
Enrolment No.:107550592024
Internal Guide: External Guide:
Dr. H.N.Misra Ms. Bhavika madam
Associate Professor (HR Assistant)
Submitted to
SARDAR PATEL COLLEGE OF ADMINISTRATION & MANAGEMENT (SPCAM-MBA)
Approved by All India Council for Technical Education (AICTE), New Delhi
AFFILIATED WITH GUJARAT TECHNOLOGIACAL UNIVERSITY, AHMEDABAD
SPEC Campus, Vidhyanagar- Vadtal Road-388315, Anand (Gujarat)
July-2011
2
PREFACE
It is true that “Experience is the best teacher”. The M.B.A. Program is a well
structured and integrated course of business management. The rapid growth of IT
industry and the blooming of related industries need the executives with the
knowledge, information and practical training in management and IT. The main
objective of practical training at M.B.A. level is to develop skills in students by
supplementing the theoretical study of business management in general. Industrial
training helps to gain real knowledge about the industrial environment and business
practices. The M.B.A. programmed provides student with a fundamental knowledge
of business and organizational functions and activities as well as an exposure to
strategic thinking of management.
In every professional course training is an important factor, students gain
theoretical knowledge of various subjects in their respective college but they are
practically exposed to such subjects only when they get the training in any
organization. It is only through training that I came to know what an industry is
and how it works. I learnt about various departmental operations and how each
department plays important role in aiming for the general goal of the company in
the industry.
During the whole training, I got a lot of experience and came to know about
the management practices in real world and how it differs from the theoretical
knowledge that we have studied in our classes.
In today globalize world where cutthroat competition is prevailing in the
market theoretical knowledge is necessary which would help the individual in
his/her carrier activities.
3
Declaration
I, Ankit B. Patel student of Sadder Patel college of Administration & Management,
Bakrol, affiliated to Gujarat Technological University hereby declare that this summer
internship project report is a result of my sincere efforts and to the best of my knowledge;
no such work has been submitted by any other person for the award of any degree in India
or aboard.
Ankit B. Patel
MBA- II SEM.
107550592024
4
ACKNOWLEDGEMENT
It will be my great pleasure to thanks to ANUPAM INDUSTRIES LIMITED for
providing a training to carry out the project work. I am also thankful to FINANCIAL
DEPARTMENT of ANUPAM INDUSTRIES LTD., who continuously guided and
provides training in our concern topic (Ratio Analysis). And I am also thankful to all staff
of the industry for their co-operation.
It will be a great pleasure and thankful to Mr. T.D. Tiwari sir (Director General of
SPEC).
I am thankful to the Ms.Bhavika madam (HR Assistant), who continuously guided
me during the training as well as supports me for acquiring all the necessary information
for the completion of the project.
I am also thankful to the Dr. H.N.Misra (Associate Professor) who guides me
during the project. Who is allowing me to do the project report.
I am thankful to all my friends for providing motivation and support during the
project. I am thankful to all who directly or indirectly help to me during my training and
making the project.
Submitted By:
Ankit B.Patel.
Enrollment no.-107550592024
SIP For year- 2010-2011
5
EXECUTIVE SUMMARY
During the training of six weeks in ANUPAM INDUSTRIES LTD. which are
situated at Anand - Sojitra road. Basically they produced the products related to port
industry like Crane. At time of training –we find that company can do better profit from
last three years. They have lots of competitor in market and as they have quality
production, the customers remain for long time as their loyal customers. The other
important thing which I believe is that Ratio analysis provides better information about
company‟s financial stand. So from that, the company can make decisions related to
future.
After completing SIP training, we can define that company position is better as
compared to previous two years. Now company profit has increased but its operating
expense has also increased because of inflation in market and hike in salary & wages.
Now company ratio saw that decrease in their debt and market share price all time increase
which is 1440.98.From the data, it can also be concluded that in the last three years „PEL‟
also expanded its asset to increase its product and thus compete with its competitor.
Company has one minus point and that is collection of payment is done late than the
required period.
Ration analysis are very important in organization. It will help to make decision
regarding future and helping organization to avoid uncertainty. Ratio also classifies all the
data in such manner on the financial basis.
Ratio Analysis is used in every organization and Ratio has broad scope. It helps
Finance Management, Asset Management, and Inventory Control and also helps to build
strong financial position of the organization.
Ratio has one limit. Sometimes interpretation may be wrong because of lack of
information or lack of knowledge of interpreter. At the time of training, some required
information was not provided by the company because of their policy. So, it was difficult
to calculate the ratios as all the data was not available and hence assumption was taken.
The other difficulty is that we have not been provided the Annual report of 2010-11.
6
INDEX
Chapter
No
Particular
Page
No.
Preface 2
Declaration 3
Certificate from Company
Certificate from College
Acknowledgement 4
Executive summary 5
1 Introduction 9
1.1 History and developments 10
1.2 General Information of company 11
1.3 Finance Department 30
2 Literature Review 38
3 Research Methodology 40
3.1 Problems 42
3.2 Objectives 42
3.3 Research Design. 43
3.4 Limitations 45
3.5 Scope 46
3.6 Tools & Techniques 47
4 Data Analysis & Interpretation 48
4.1 Steps 50
4.2 Advantages & Limitation 51
4.3 Interpretation 54
5 SWOT Analysis 83
6 Findings 86
Conclusion & Suggestions 87
Bibliography 89
Annexure 90
7
LIST OF TABLES
Table
No
Particular
Page
No
1 Profit & loss Account 31
2 Balance Sheet 33
3 Cash flow Statement 37
4 Current Ratio Description 55
5 Liquid Ratio Description 57
6 Quick Ratio Description 59
7 Debt Equity Ratio Description 62
8 Total Debt Equity Ratio Description 64
9 Gross Profit Ratio Description 66
10 Net Profit Ratio Description 68
11 Operating Profit Ratio Description 70
12 Debtors Turnover Ratio Description 73
13 Creditors Turnover Ratio Description 75
14 Return on Equity Ratio Description 77
15 Return on Long-term Fund Ratio Description 79
16 List of Rato 81
17 Common size Statement 95
18 Financial Results 96
8
LIST OF GRAPHS
Graph
No
Particular
Page
No
1 Current Ratio 56
2 Liquid Ratio 58
3 Quick Ratio 60
4 Debt Equity Ratio 63
5 Total Debt Equity Ratio 65
6 Gross Profit Ratio 67
7 Net Profit Ratio 69
8 Operating Profit Ratio 71
9 Debtors Turnover Ratio 74
10 Creditors Turnover Ratio 76
11 Return on Equity Ratio 78
12 Return on Long-term Fund Ratio 80
9
10
1.1 HISTORY AND DEVELOPNMENT
The foundation of Anupam was laid in 1973 by entrepreneur techno craft- shri,
J.C.Patel., who had gained rich experience of a decade in crude designing at heavy
engineering corporation, Ranchi.
The main trust of company all along has been its proficiency in its design capacity,
research, development and satisfaction of its customer.
Anupam Industries Ltd. Having enriched experience of 37 years is one of the market
leaders in crude manufacturing in India. In a span of 37 years the company has a satisfied
customer base of more than 3500 installation across the globe.
Through its 37 decades long history, Anupam has grown strength to strength and is
now a front runner in the crane manufacturing industries.
The company headed by J.C.Patel founder chairman, who is a sound technocrat with
a total experience of 4 decades under his leadership a team of young technocrat Mr. Mehul
Patel who is managing director and Mrs. Shreya Patel who is executive director both with
rich experience are holding different operations of the company. They are backed by a
team of professors having experience of more than 3 decades of various functions like
designing, engineering, marketing, contracts, finance and operations.
Since the “Anupam Industry Ltd.” has gradually developed its capabilities and have
flourished in all horizon. Today Anupam has one of the foremost.
11
1.2 General information of company:
Name : “ANUPAM INDUSTRIES LTD”
Registered Office : 138, G.I.D.C.
` Vitthal udyognagar,
Anand. 388121
Telephone no : (02692) 236118, 235210, 236324.
Fax no : (02692) 236324
E-mail : [email protected]
Web-site : http//www.anupamgroup.com
Year of establishment : 1973
Promoters : Mr.Jagdishchandra G. Patel.
Board of Directors :Chairman: Mr. Jagdishchandra Patel
Managing Director: Mr. Mehul Patel
Executive Director: Mrs. Sherya Patel.
12
Auditors : Ms. Deloitte Haskins & sells
(Chartered accountant)
Ahmedabad
CEO : Mr.N.Nagrajan
Company secretary : Mr.Dattanand Heranjale–
Bankers :
HDFC Bank Ltd.
ICICI Bank Ltd.
AXIS Bank Ltd.
Standard chartered Bank Ltd
Size of the unit : Anupam Industry is a medium scale unit.
Main Product :
1) Overhead travelling sot crane up to 500t capacity.
2) Gantry/ Goliath cranes up to 500t capacity.
3) Four glider/ double girder ladle crane up to 500t capacity.
4) Magnet cranes with rotating trolley or rotating spreader beam.
5) Steel plant equipment viz., Coil/ slag pot transfer car, ladle car, ladle.
6) Tower crane.
7) Level puffing crane.
8) Container handling port cranes viz., RMQC, RTGC & RMGC.
9) Heavy duty transfer trolleys.
13
Clients :
1. Jindal steel & power ltd.
2. Steel authority of India ltd.
3. L&T special steel & heavy forgings ltd.
4. Ad-hydro power ltd.
5. Alston projects ltd.
6. Hindalco industries ltd.
7. Mahajan co ltd.
8. Nagarjuna construction
9. Maytas infrastructure ltd.
10. L&T ltd.
11. Pipapav shipyard ltd.
12. Abg shipyard ltd.
13. L&T ltd(ship building division)
Vision :
To view growth as a way of life and make Anupam Industries the foremost venture to
invest in and prosper.
Mission :
To establish ourselves as a dominant player in crane manufacturing industries across
the globe.
Quality policy :
Anupam Industries is committed to provide quality products to the
customer‟s requirements. Anupam Industries based in the customaries services.
Upgrading quality through continuous improvement in all areas of our operation in
our mission. Customers satisfaction shall remain our motto & there in our assets.
14
ORGANISATION STRUCTURE
15
UNIT - I
SHOP AREA : 4300 SQ. M
ASSEMBLY SHOP 1 : Span 10M X Ht 6M
X L 56.3M
ASSEMBLY SHOP 2 : Span 12M X Ht 8M
X L 56.3M
EQUIPPED WITH : 25T - 1 no. & 10T - 2
nos. cranes
STORAGE SHOP 1&2 : Span 14.5M X Ht
6M X L 40M
EQUIPPED WITH : 10T - 2 nos. cranes
LOAD TESTING
FACILITY
: 250 T 1 No. LOAD
PIT
MANUFACTURING
CAPACITY
: 4 to 6 CRANES PER
MONTH
LARGEST
COMPONENT
HANDLING
CAPACITY
: 50T
16
UNIT - II
SHOP AREA : 6000 SQ. M
FABRICATION SHOP : Span 17.5M X Ht 12M X
L 100M
EQUIPPED WITH : 20T -2 nos. & 5T -1 no.
cranes
ASSEMBLY SHOP : Span 19M X Ht 12M X
L 100M
EQUIPPED WITH : 40/10T -2 nos. & 20T -1
no. cranes
LOAD TESTING FACILITY : 350 T 2 Nos. LOAD
PITS
MANUFACTURING
CAPACITY
: 8 to 10 CRANES PER
MONTH
LARGEST COMPONENT
HANDLING CAPACITY
: 100T
17
UNIT - III
SHOP AREA : 5000 SQ. M
FABRICATION SHOP : Span 20.0m X H 8.5m X L
78m
EQUIPPED WITH : 20T - 2 nos. cranes
ASSEMBLY SHOP : Span 20.5m X H 8.5m X L
78m
EQUIPPED WITH : 40/10T - 2 nos. cranes
LOAD TESTING FACILITY : 350 T 1 No. LOAD PIT
MFG./ASSEMBLY CAPACITY : 8 to 10 CRANES PER
MONTH
LARGEST COMPONENT
HANDLING CAPACITY
: 100T
18
UNIT - IV (NADIAD)
SHOP AREA : 8000 SQ. M
OPEN AREA : 1500 SQ. M
FABRICATION/ASSEMBLY BAY-I : Span 25M X Ht 7M X L
120M
EQUIPPED WITH : 20T - 2 nos cranes
FABRICATION/ASSEMBLY BAY-II : Span 17M X Ht 10M X L
120M
EQUIPPED WITH : 40T - 2 nos. EOT cranes
FABRICATION/ASSEMBLY BAY-III : Span 25M X Ht 12M X L
120M
EQUIPPED WITH : 10T - 2 nos. EOT cranes
LOAD TESTING FACILITY : 250T 1 No. and 100T 2
Nos. LOAD PITS
MANUFACTURING CAPACITY : 10 to 15 CRANES PER
MONTH
LARGEST COMPONENT HANDLING
CAPACITY
: 100T
19
UNIT - V
SHOP AREA : 8000 SQ. M + 7000
SQ. M Open Area,
Office and Store
FABRICATION BAY : Span 13.2M X Ht 6M
X L 100M
EQUIPPED WITH : 10T - 2 nos. & 5T – 1
no. cranes
FABRICATION BAY-II : Span 13.2M X Ht 7M
X L 100M
EQUIPPED WITH : 30/5T & 7.5T - 1 no.
each cranes
ASSEMBLY BAY – I : Span 26M X Ht 15M
X L 102M
EQUIPPED WITH : 75/10T - 2 nos. EOT
cranes
ASSEMBLY BAY – II : Span 19.5M X Ht 6M
X L 100M
EQUIPPED WITH : 3T - 4 nos. EOT
cranes
LOAD TESTING FACILITY : 450T 1 No. LOAD
PIT
MFG./ASSEMBLY CAPACITY :10 to 15 CRANES
PER MONTH
LARGEST COMPONENT
HANDLING CAPACITY
: 150T
20
UNIT - VI (ACEPL)
SHOP AREA : 1800 SQ. M
FABRICATION SHOP : Span 22M X Ht 15M X L
80M
EQUIPPED WITH : 40/10T - 2 nos. cranes
MANUFACTURING CAPACITY : 4 to 6 CRANES PER
MONTH
LARGEST COMPONENT
HANDLING CAPACITY
: 100T
STORAGE
YARD :-
YARD-I, YARD-II & YARD-III
Aggregated 15000 SQ. M open & close area for raw material, finish products
and heavy components storage
21
MANUFACTURING PROCES:
Different companies have different types of product and different product has
different manufacturing process. Anupam industry limited produces different types of
crane. Crane is just widely used in various material handling applications and are highly
durable.
The company produces three types of cranes which are as under:
1. E.O.T. crane
2. Gentry crane
3. Semi portal crane
Every input raw material is inspected tested as per our quality assurance plan. Heat
nos. Are allotted to all about raw materials and are transferred even the smallest part of the
crane and the same can be co-related with relevant test certificates.
Every manufacturing operation is inspected and build dimensions are recorded in
our history and sheet which engages supply of spare as per as build dimensions‟ at any
time during the life span of our cranes.
Assembly stand load testing by and handling facilities for manufacturing crane up to
200 tones capacity.
Latest sophisticated machines for critical machining operations like gear, hobbling,
boring, milling, planning etc... Are available. The company produce different types of
product also like:
1. ELECTRICAL PANEL:
Modular design, case to install and maintain, reliable operation baseless circulatory,
ducted wiring and compact terminals motor overload protection to prevent over
loading.
22
2. BRAKES:
Single/dual disc/ shoe electromagnetic/EHT brinks with features like automatic
braking on power failure.
3. GEAR BOX
The entire gear boxes are made of accurate hob cut helical/spur gears and pinions
having hardness 250 to 350 BHN made from carbon ally steel. All gears and pinions
running on antifriction types ball giving constant splash lubrication. The helical/spur
gear designed for adequate strength and optimum wear resistance for smooth
operation and long life.
4. PAINTING:
Two coats of primary before assembly and two coats of synthetic after testing.
5. LIMIT SWITCH:
Safety limit switches for shoppers will be provided to prevent over travelling in all
motions.
CT < DRIVE
WIRE HOPE HOIST
HOSTING GEM BOX FOR CLUCH
INVERTOR DAVES
Anupam industry have different department for the work carried out effectively and
efficiently. The entire department maintains good interaction with one another. Following
are the departments;
23
Marketing & Sales Department :
Anupam has well organized marketing department. It has enough number of
marketing agents & salesmen.
It‟s most important function is to bring orders as without having an order no
one will think of producing items. Marketing Department fetches orders from
various industries through advertisement, discounts, etc. It brings details depicting
client‟s requirements. The details include technical specifications, terms &
conditions, price, delivery date. It also receives payment
Design Department :
It is the one of the most important function of any organization. The main
Function of this department is to design as per the technical detail provided by the
marketing department.
Copy of the work order is released by marketing department. This copy is given to
the design department. Design department released set of part drawing and assembly
drawings to the planning department as per design.
Design department maintains drawings of part assemblies, Part and update their
drawings if any change occurs in the design.
Production Planning & Control :
Once design department prepared the design according to specification
requirements, the marketing people show design to customer & make changes if require
then the final design comes to ppc department. Now the function of planning starts.
24
They first list out bill of materials in which they decide about make or buy policy.
They check whether the material is available or not. If not then they put order to a
purchase department.
They draw out activity chart for all activity, time for each activity & man hour‟s
availability. According to activity chart, they fix the completion date & show it to
marketing department. During manufacturing of the product they continuously remain in
contact with people & note if the production is carried out as per planning or not.
Purchase department :
Purchase department is involved in purchasing items from the suppliers and
selecting & registering the supplier on the basis of their ability to meet specified
requirements. It is also responsible for establishing & maintaining the record of acceptable
suppliers & evaluation of suppliers.
Quality Control Department :
Purchased raw materials and finished items are first inspected by quality control
department and after certified by quality control department as flawless, they are taken to
the store.
Quality Control Department is also involved in stage inspection and final
inspection of product.
25
Maintenance Department :
Maintenance department is responsible for repairing the breakdown machines as
soon as possible to reduce machine down time cost. It is also responsible for
maintaining data of available machines and equipments.
Store Department :
The function of store is to document a procedure for receipt & issue of material
from store & to maintain sufficient inventory level of items to ensure availability of
material for production process.
Dispatch Department :
Function of dispatch department is to dispatch the product to the respective
client.
Human resource management :
Human resource department take care of the employees and as well as the worker.
HRD take care of the payment salary as well as the wages to the concern employees or
worker on time. And the wages and salary fixed on the basis of the merit of the work and
which position employee work.
HRD make transfer or promotion of the employees‟ base on the performance
system.
HRD arranged the training to the employees time to time for the better
improvements of the employee.
HRD also take of the allowances to the employees like travelling, etc. which is
fixed by the management of the company.
26
I. TIME KEEPING SYSTEM:
In the industrial would success largely depend upon the business organized time
keeping system? Time keeping system helps in knowing about the regularly of worker or
employees.
The time keeping system includes work timing of managerial persons, workers and
visitors time as well as dinner and lunch time.
In any business organization are need the facility of time keeping system. It is one of
the most important in any industry. In Anupam industry limited there are total 370
workers. The time of those workers for working in plant is divided in two shifts. The one
is 8:00 am to 4:30 pm and second shift is 4:30 pm to 12:30am. Generally the time of
working for official workers is 9:00 am to 6:00pm.
In different industries there is a different time keeping system. In Anupam there is
a computerized attendance system. There is a one machine installed in the entrance of the
industry. Every employee of the industry had a magnetic card and keep with him/her
during the job timing. The magnetic identify card based on the employee number allot to
them. At the time of joining the card tank at the entrance and it is not taken into machine.
The attendance from the machines is transferred at regular internal to the main computer
system available in the company.
There are mainly two shifts.
Shift-1 8:00 am to 4:30 pm
Shift-2 4:30 pm to 12:30am.
Generally the time of working for official workers is 9:00 am to 6:00pm.
27
II. EMPLOYEE SEVICES:
Employee service is necessary for all industries because by providing service to the
employee work efficiency and take interest in work. In different industrial unit‟s employee
are given different kind of service.
According to employee welfare act 1948. Anupam industry limited provides much
service to the employee like:
1. Medical facility is given to the employees ensured by the major or minor accident in
organization. Medical claims policy given to the family members.
2. Industry also provides incentive for family planning.
3. Company provides uniform to the poem and to the gatekeeper and watchman.
4. Company provide helmet to the employee who work in manufacturing department for
their safety.
5. The workers of Anupam industry limited. get a financial service from the company
they are as follows:
Loan and advance at the time of two or three day in replace of land and building.
Vehicle loan
The worker also get a workmen compensation fund.
Finance Department:
The finance department take care of the all the financial matter of the
company. From acquiring fund to proper utilization of the fund and many more
which is in terms of finance, the department takes care of all the finance related stuff
of the company. We see in detail on some topic of the finance.
28
Finance is regarded as the lifeblood of a business organization. The financial
management is concern with procuring of financial resources and its judicious utilization
with a view to maximize the shareholder‟s wealth. The finance function is more vital and
crucial to organization. Hence there is need for sound and efficient organization for the
finance function. A firm should give proper and due attention to organization of its finance
department. Organization of finance function differs from firm to firm. It will depend on
various factories such as size and nature of firm‟s business capability of the person
handling the finance and financial philosophy of the organization. The designation of
finance also differs from firm to firm.
ANUPAM‟s organizational structure for finance department is as under:
FUND MANAGEMENT
1. Fund forecasting monthly & weekly.
2. Follow up & arrangement of funds.
3. Handling of petty cash.
4. Ensuring timely legal payment & to vendors.
TAXATION
1. Payment of taxes.
2. Filling monthly, quarterly, annual reports.
3. Audit of reports.
4. Proper deductions of TDS from vendors & payments.
29
COSTING
1. Deciding cost of product
BUDGETING
1. Preparation of budget as per market forecasting
2. Comparing actual with budgeted i.e. variance analysis
AUDITING
1. Filling monthly, quarterly, annual reports.
2. Audit of reports.
OBJECTIVES:
ANUPAM INDUSTRIES LTD believes in themselves and thus has set a
few objectives for them which they thrive on:-
To delight our customers by supplying the required product in time.
To attempt continuous improvement in efficiencies and environmental protection.
To constantly carry out improvements in our product processes and method.
To built relationship with our sub-contractor business associates.
30
1.3 INTRODUCTION OF FINANCE
Meaning and types of financial statement:
A financial statement to an organized collection of data
according to logical and consists accounting procedures. Its purpose is to
convey an understanding of some financial of aspects business of a
firm.
Thus the term financial statement generally refers to two
basic statements.
1. The income statement
2. The balance sheet
Financial statement provides information of value of company
officials as well as to various outsiders, such as investors and lenders of
fund publicity owned companies are required to periodically publish
general purpose financial statements that include a balance sheet an
income statement issued for external distribution are prepared according
to generally accepted accounting principles, which are the guidelines for
the content and format of the statements.
Financial statement
Income Balance Sheet Statement of retained
earning
(P& L Appropriation
A/c)
Statement of
change in
financial
(cash flow &
fund flow
statement)
31
Income statement (P&L a/c):
It represents the details of earnings achieved for the details periods. It separately
amazes revenue and expenses, which result from the company‟s outgoing major or central.
This statement is useful to investors, creditors and other users in determining the
profit ability of operations. The income statement must also show earning per share (eps).
ANUPAM INDUSTRIES LIMITED
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2011
Schedule Year ended march
31,2011(in rupees)
Year ended march
31,2010(in rupees)
INCOME:
Sales
Less : Excise duty recovered on sales
Erection and Other charges
[T.D.S. Rs. 20,77,850/-(P.Y. Rs. 2602744/-)]
Other income
12
3124060857
241560394
2135838282
196228750
2882500463
142998477
6934603
1939609532
94050651
2119900
TOTAL : 3032433543 2035780083
EXPENDITURE:
Increased in stock
Materials Consumed
Manufacturing Expenses
Employee Costs
Administration & General Expenses
Selling & Distribution Expenses
Interest & Finance Charges
Depreciation/Amortization
13
14
15
16
17
18
19
5
(167,754,199)
1,969,680,757
66,565,737
109,858,432
94,370,936
84,367,276
139,012,450
40,644,270
(1,376,656)
1,307,620,591
63,564,635
78,957,623
62,317,975
67,077,635
105,345,308
9,061,845
TOTAL: 2,336,745,659 1,692,568,956
32
Profit Before Tax:
Provision for:
Current Tax
{Including RS. 36,492/-for Wealth Tax
(P.Y.Rs. NIL)}
Tax for earlier years
Deferred tax
Fringe Benefit Tax
695,687,884
238,036,492
4,088,906
13,004,106
---
343,211,127
105,000,000
318,329
10,676,712
820,760
Profit After Tax:
Add: Balance brought forward from p.y
440,558,380
1,866,080
226,395,326
470,754
Amount available for Appropriations: 442,424,460 226,866,080
APPROPRIATIONS:
Dividend on Preference Shares
Tax on Dividend
Transfer to General Reserve
Balance Carried to Balance Sheet:
Earnings Per Share
Basic
Diluted
(refer Note-21 of Schedule 21)
Significant Accounting Policies
Notes on Accounts
20
21
4,930
819
425,000,000
------
------
225,000,000
425,005,749 225,000,000
17,418,711 1,866,080
115.80
-----
59.51
59.51
33
Balance Sheet [ statement of financial position ]:
It represents the assets & liabilities, the owner‟s equity of the company at a specific
point in time. It is prepared on a particular data while income statement is for a particular
period, here the total assets equal (balance) the sources of finding for those resources.
Balance Sheet as at 31st March, 2010
Sources Schedule As at 31st March 2010 As at 31
st March
2009
SOURCES OF
FUNDS
Share capital 1 437943260 38042260
Reserves &surplus 2 969573146 528949393
1407516406 566991653
LOANS
Secured Loans 3 647716697 802087357
Unsecured Loans 4 32536000 7713069
680252697 809800426
Differed tax liabilities 29385923 16345194
Total 2117155026 1393137273
APPLICATION OF
FUNDS
Fixed Assets
Gross Block 5 633108667 397098514
(-) depreciation 65497560 24980092
Net Block 567611107 372118422
34
Capital work in
progress
339615 32912948
Investment 6 19900000 1218950
Current assets Loans
& advances
Inventories 7 600169056 274038795
Sundry Debtors 8 1668520305 1112394029
Cash & Bank Balance 9 197011292 111869851
Loans & Advances 10 301733690 115392662
2767434343 1613695337
Less:- Current
Liabilities &
Provisions
11
Current Liabilities 1019753303 521808384
Provisions 239965622 105000000
1259718925 626808384
Net current assets 1259718418 986886953
Miscellaneous
expenditure
(to the extent not
written off or
adjusted)
Share issue expenses
incurred during the
year
21687886
(less) adjusted against
share premium
account
99000
21588886
Total 2117155026 1393137273
35
Statement of changes in financial position
For a better understanding of the affairs of a business, it is essential to identify the
movement of working capital or cash in and out of the business. This information is
available in the statement of changes in financial position of the business.
Change in working capital position ( fund flow statement )
Change in cash position ( cash flow statement )
Change in overall financial position ( cash flow statement )
The details of the above statement are given below:
1. Fund flow statement
Fund flow statement is a statement depicting change in working capital. It is also
termed as statement of sources and application of funds.
It deals with the financial resources required for running the business activities. It
explains how the funds were applied during a particular period.
Fund flow statement helps the financial analyst in having more detailed analysis
and distribution of resources between two balance sheet dates. Such study is required
regarding the future working capital position of the company a projected funds flow
statement can be prepared.
2. Cash flow statement
An analysis of cash flows is useful for short-run planning. A firm needs sufficient
cash to pay debts maturing in the near future, to pay interest and other expenses and to pay
dividends to shareholders. The firm can make projections of cash inflows and outflows for
the near future to determine the availability of cash. This cash balance can be matched
with firm‟s need for cash during the period, and accordingly arrangements can be made to
36
meet the deficit or invest the surplus cash temporarily. A historical analysis of cash flows
provides insight to prepare reliable cash flow projections for the immediate future.
A statement of charges in financial position on cash basis, commonly known as the
cash flow statement, summarizes the causes of charges in cash position between dates of
the two balance sheets. It indicates the sources and uses of cash.
Sources and Uses of Cash
The following are the sources of cash:
o The profitable operations of the firm,
o Decrease in assets(except cash)
o Increase in liabilities(including debentures or bonds), and
o Sale proceeds from an ordinary or preference share issue.
The uses of cash are:
o The loss from operations,
o Increase in assets(except cash),
o Decrease in liabilities(including redemption of debentures or bonds),
o Redemption of redeemable preference shares and
o Cash dividends.
37
Cash Flow Statement for the year ended March 31st, 2010
Particulars March 31,
2010
March 31. 2009
Cash flow from operating activities
Profit before taxation and extraordinary items: 695687884 343211127
Adjusted for:
Depreciation/ Amortization 40644270 9061845
Interest & Finance charges 159055183 105345303
Interest Income (20042733) (6229358)
Loss on derivatives 12652445 -
Loss on sale of fixed assets(net) 68427 14264
Bad debts written off 12652445 1274050
Investment written off 818950 -
Unrealized gain on foreign exchange (3835277) -
Sub Total 201516884 109466109
Operating Profit before working capital charges 897204768 452677236
Adjusted for:
Inventories (326130261) (57815183)
Trade receivables (568778721) (449689756)
Loans & Advances (38662653) (15148781)
Trade Payable and Other Liabilities 489480202 164762390
Sub Total (444091433) (357891330)
Cash generated from operation activities 453113335 94785906
Less: Taxes paid (256 767
281)
(86523718)
Net cash from operating activities 196346054 8262188
Cash flow from investing activities
Purchase of fixed assets (203956549) (165067077)
Sale proceeds from fixed assets 324500 218194
Investment (19500000) -
Net cash used in investing activities (223132049) (164848883)
Cash flow for financing activities
Proceeds from issue of shares 400000000
Long term borrowings (61967307) 59898728
Cash credit & short term borrowings (89750028) 242106646
Unsecured loans 24822931 4727069
Loss on derivatives (12155619) -
Share issue expenditure (21687886) -
Interest & Finance charges paid (147377388) (105345308)
Interest received 20042733 6229358
Net cash used in financing activities 111927436 207616493
Net Increase / (Decrease) in cash & cash
equivalents
85141441 51029798
Cash and cash equivalents as at April 01, 2009 111869851 60840053
Cash and cash equivalents as at march 31, 2010 197011292 111869851
38
39
Literature Review
Discussion and analysis concerning our future growth perspective are forward
looking. In the future number of risk are involved that‟s why Ratio analysis helps to
clarify our future path. There is various way we can analyzed the data among them one of
technique is Ratio analysis. The risk and uncertainties regarding fluctuations in earning is
only analyzed by ratio analyst. There are number of ratio found by various annalists
according to their co. requirement.
Management of Anupam Industries Ltd. Analyze whole data using various Ratio
and graph so they can interpret all financial data and identified the company position as
well as they also clarified some data in annual report.
40
41
Research Methodology
The basic concept of research methodology refers to the way in which
companies conduct their research and how they collect the data they need. Whenever a
company or organization needs to investigate a particular area of their business dealings,
they need to adapt the most suitable research methodology for the job.
Research methodology typically involves a full breakdown of all the options
that have been chosen by a company in order to investigate something. This would include
the procedures and techniques used to perform the research; as well as any of the
terminology and explanations of how these methods will be applied effectively.
A company may need to decide what format of research they want to use before the
investigation begins. For example, if a company that sells a particular product needs to
launch research to find out how effective or desirable a new product is, they will need to
conduct what is known as primary research. This method means that the company will
collect data and information themselves first hand.
Alternatively, a company many only require figures or statistical findings
that can be located from an external source to themselves. This is known as secondary
research, and this area of research methodology typically involves reading published
journals, newspapers and other materials to give companies the information they need
second hand.
However, research methodology is not always pin-point specific. Many areas
of research methodology may simply be referring to a generic path or method that a
company will apply in order to retrieve the information they need.
Research methodology is the way in which researchers specify how they are going to
retrieve the all-important data and information that companies will need to make vital
decisions.
42
3.1 Problems:
During the training due to „PEL‟ Policy. Some data of company not provided
us for analysis so lack of proper information we cannot reach at point decision.
Some data like investment strategy, allocation of fund their depth which are
provided but lack transparency we can accept which are provided by him
At the time of training because of work load and meeting they are not respond
us and it will take long time for their response
The most important thing is that which we studied in theory some application
is different Practical Operation.
3.2 Objectives of Research:
1. To gain familiarity with the present‟s status of the business.
2. To measure the frequency of occurrences of various parameters/indicators.
3. To reveal the trend and tendencies in the business, i.e., to assess the growth or
expansion potential of the business.
4. To identify the influencing factor or determinants of business parameters.
5. To test the significance and validity and reliability of the results.
43
3.3 RESEARCH DESIGN:
Research design or model indicates a plan of action to be carried out in
connection with a proposed research work. It provides a guideline f or the
researcher to enable him to keep track of his actions and to know that he is
moving in the right direction in order to achieve his goal. The purpose of
research is to provide information that will aid in management decision
making.
TYPES OF RESEARCH DESIGN:
On the basis of the objectives of the marketing research can be classified
into:-
I. Exploratory Research
II. Conclusive Research
The research design for exploratory research is best characterized by its
lack of structure and flexibility. It is generally used for the development of
hypothesis regarding potential opportunities and problems.
Exploratory Research is further subdivided into;
Search of secondary data
Case study
Survey of experts
Conclusive research which is use to provide information for the evaluation of
the alternative courses of action can be sub-divided into :
Descriptive research.
Causal or experimental research.
44
3.3 LIMITATIONS:
1. The study is based on analytical tools which have their own limitations
This applies to this project.
2. The reliability and accuracy of the calculations depends very much in
The information found in the balance sheet & its reliability.
3. Absolute reality can‟t be found in the financial statement.
4. The entire study is based on secondary data.
5. The study is based on only one company i.e. ANUPAM industries ltd.
6. The external factors such as fiscal policies, bank rate, government
Policies etc. are as applicable in the previous year for the current Trends and their
impact is to be professionally changed.
45
3.4 Scope of research:
1. National innovative capacity : modeling, measuring and comparing national capacities
2. Designing efficient incentive systems for invention and innovation : intellectual property
rights, prizes, public subsidies
3. Research in EPFL labs : new economics of science
4. New R&D methods and the production of reliable knowledge in sectors which lagged
behind
5. New models of innovation: open, distributed systems and the role of users.
6. Other issues to be developed.
Source of secondary data:
Most of the calculations are made on the financial statement of the company provided
statement.
Referring standard text and refer book collected some of the information regarding
theoretical aspect.
Method to access the performance of the company method of observation of the work in
finance department in followed.
ADVANTAGES OF SECONDARY DATA:
-
The major advantage of secondary data is economy. As the data are already
available, they can be obtained at a relatively low cost.
The secondary data can be obtained quickly.
The secondary data enable the researchers to identify the deficiencies in the
data.
They are useful in the case of exploratory researches as they provide
increased understanding of the problem.
46
LIMITATIONS OF SECONDARY DATA:
The available data may not suit the current purpose of research, due to
incompleteness, generalities and so on. Information may be outdated or
obsolete.
The methodology used in collecting the data such as the sample size,
date of the research, etc., may be unknown.
All the findings of a research study may not be made public.
Conflicting data may exist.
It may be difficult to determine the accuracy of secondary data.
47
3.5 TOOLS AND TECHNIQUES OF ANALYSIS
The following tools and techniques have been used for analyzing the collected data. In this
project report, I have used ratio analysis to make the financial analysis of the various
companies.
1. RATIO TECHNIQUE:
Financial ratio analysis refers to the mathematical expression of relationship
between two accounting figures drawn either from balance sheet or from profit and loss
account or both.
2. STATISTICAL TOOLS USED
The statistical tools used in this project are different formulas. Different
kinds of graphs are used in making this project.
3. PROCESSING AND ANALYZING DATA
Once all the information was available from the financial report, I started
processing data by way of various tables & graphs showing the results. The analysis of a
data helps a person to come on conclusion and serve the purpose for him. With the help of
this analysis the management can know regarding the level of management being run in
the company.
4. PREPARING THE REPORT
After the above data was tabulated, interpreted and analyzed the report was
prepared embodying the findings of research. Modest attempts were made to keep
objectivity coherence and clarity in presentation of ideas and use charts and graphs.
48
49
Data Analysis & Interpretation
RATIO ANALYSIS:
Ratio analysis is one of the techniques of financial analysis where ratios are used as
a yardstick for evaluating the financial condition and performance of a company. The
analysis and interpretation of various accounting ratios gives a skilled and experienced
analyst, a better understanding of the financial condition and performance of the firm than
what could have obtain only through a pleural financial statement.
The most important task of a financial manager is to interpret the financial
information in such a manner, that it can be well understood by the people, who are not
well versed in financial information figures. The technique, by which it is to be calculated,
is known as “Ratio Analysis”
1) Percentage.
2) Rate.
3) Proportion
Ratio analysis is an important technique of financial analysis. It depicts the
efficiency or shortfall of the organization in the form of trend Analysis. Different ratio
appeal to different people managements, having the task of running business efficiency,
will interest in all ratio. A supplier of goods on credit will be partially in liquidity ratios,
which indicate the ability of business to purchase.
Existing and future shareholders will interest in investment ratios, which indicate the
level of return that can be expected on an investment in business.
Major customers, intent on having a continuing source of supply, will be interested
in the financial stability, as reveled by the capital structure, liquidity, and profitability
ratios. Debentures and loan stockholders will be interested in ability of a business will be
interested in the ability of a business to pay interest, and ultimately to repay capital.
A banker, gibing only short-term loans, will be interested mainly in the liquidity of the
business, and its ability to repay those loans.
50
4.1 STEPS IN RATIO ANALYSIS
I. Collection of information, which are relevant from the financial statements and then to
calculate different ratios accordingly.
II. Comparison of computed ratios of the same organization or with the industry ratios.
III. Interpretation, drawing of the inference and report writing.
51
4.2 ADVANTAGES OF RATIO ANALYSIS
Ratio analysis is a very important and useful tool for financial analysis. It serves much
purpose and is useful not only for internal management but for prospective investors,
creditors and other outsiders. The following are the important uses (advantages) of Ratio
Analysis.
It is important and useful to check upon the efficiency with which the Working capital is
being used (managed) in a business enterprise.
It helps the management of business concern in evaluating its financial position and
efficiency of performance.
It serves as a sort of health test of business firm, because with the help of these analyses
financial managers can determine whether the firm is financially healthy or not.
A Ratio Analysis covering a number of past accounting (financial), periods clearly shows
the trend of changes in the business position.
It helps in making financial estimates for the future.
It helps the task of managerial control largely.
It helps the credit suppliers and investors in evaluating a business firm as a desirable debtor
or as a potential investment outlet. With the help of this analysis standard ratios can be
established and these can be used for the purpose the comparison of a firm‟s progress and
performance.
This analysis communicates important information regarding financial strength and
standing, earning capacity, debt capacity, liquidity position, capacity to meet fixed
commitments.
This analysis may be employed for comparing the working result and efficiency of
performance of a business enterprise with that of other enterprises engaged in the same
industry.
It helps the management or business concern to discharge their basic functions of planning,
coordinating, controlling, etc.
It serves as an instrument for testing management efficiency.
It sometimes provides a useful tool for decisions on certain policy matters.
52
LIMITATIONS OF RATIO ANALYSIS
Accounting ratios (calculated under the system of the ratio analysis) will be correct only if
the accounting data (figures), on which their based is correct.
It is mainly a historical analyses or an analysis of the post financial date.
About profits of a business concern, ratio analysis may be misleading in certain
circumstances.
Continuously changes in price levels (or purchasing power of money) seriously affect the
validity of comparison of accounting (financial) periods and make such comparisons very
difficult.
The comparison become difficult also because of difference in the definition of several
financial accounting terms like gross profit, operating profit, net profit, and account of
considerable diversity in practice as regards their measurement.
The validity of comparison is also seriously affected by window dressing in the basic
financial statements and by differences in accounting methods used by different business
concerns.
A single ratio will not be able to convey much information required for Proper decision-
making.
This analysis gives only a part of the total information required for Proper decision-making.
Ratio analysis should not be taken as substitute for sound judgment.
It should not be overlooked that business problem cannot be solved simple mechanically
through ratio analysis or other types of financial analysis.
53
DIFFERENT TYPES OF RATIO
LIQUIDITY RATIOS
1. Current ratios
2. Liquid ratio
3. Quick ratio
PROFITABILITY RATIOS
1. Gross Profit to Sales Ratio
2. Net Profit to Sales Ratio
3. Operating Profit Ratio
4. Operating Earnings Ratio
5. Administrative Expense Ratio
6. Selling Expense Ratio
7. Return on Total Asset Ratio
8. Operating Ratio
9. Return on Capital Employed Ratio
10. Return on Shareholders Ratio
SOLVANCY RATIOS
1. Debt Equity Ratio
2. Interest Coverage Ratio
3. Dividend Coverage Ratio
ACTIVITY RATIOS
1. Debtors Ratio
2. Creditors Ratio
VALUATION RATIOS
1. Earnings per Share Ratio
2. Dividend per Share Ratio
3. Payout Ratio
4. Price Earnings Ratio
5. Yield Ratio
54
4.3 Analysis and interpretation of ratio
LIQUIDITY RATIO :-
The importance of adequate liquidity in the sense of the ability of a firm to meet
current or short-term obligation when they become due for payment can hardly be
overstressed. In fact, liquidity is a prerequisite for the very survival of a firm. The short
term creditors of the firm are interested in the short term solvency or liquidity of the firm,
but liquidity implies , from the view point of utilization of the funds of the firm, the funds
are idle or they earn very little. A proper balance between the two contradictory
requirements that is liquidity and profitability is required for efficient financial
management.
The important liquidity ratios are as under.
1) CURRENT RATIO:
2) LIQUID RATIO:
3) QUICK RATIO:
55
4.1.1 CURRENT RATIO :-
Formula:
C.R. = CURRENT ASSETS
CURRRENT LIABILIES
RATIO DISCRIPTION:-
Table 1: Current ratio of Anupam Industries Ltd
PARTICULARS
2009-10
Rupees
2008-09
Rupees
CURRENT ASSETS 2767434343 1613695337
Inventories 600169056 274038795
Sundry debtors 1668520305 1112394029
Cash & Bank 197011292 111869851
Loans and Advances 301733690 115392662
CURRENT LIABILIES 1259718925 1571808384
Other creditors 756104295 320753976
Advances from customers 165775479 166182942
Other liabilities 97873529 34871466
Provision 239965622 1050000000
Total 1507715418 41886953
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 2767434343
1259718925
= 2.20:1
2008-09 = 1613695337
1571808384
= 2.57:1
56
Graph: Current ratio of Anupam Industries Ltd.
ITERPRETATION:
This ratio is an indicator of the firm‟s commitment to meet its short-
term liabilities. It is expressed as in the formula. Current assets means assets
means that will either be used up or converted into cash within a year time or
during the normal operating cycle of the business, whichever is longer.
Current liabilities mean liabilities payable within a year or during the
operating cycle whichever is longer.
The ideal current ratio is 2:1. The ratio of two is considered as safe
margin of solvency because if the current assets are reduced to half i.e. one
their payment in full.
From the above table of current ratio, it is clear that the company‟s
current is more than the ideal ratio. Therefore, it can be said that creditors are
safe in the company. The company‟s current ratio has remained satisfactory
for the last two years.
57
4.1.2 LIQUID RATIO
Formula:
Liquid ratio = current assets – stock
Current: liability –bank borrowings
RATIO DISCRIPTION
Table 2: Liquid ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
Current Assets 2767434343 1613695337
Stock 167754199 1376656
Current Liability 1259718925 1571808384
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 2767434343-167754199
1259718925
= 1.72:1
2008-09 = 1613695337-1376656
1571808384
= 2.14:1
58
Graph: Liquid ratio of Anupam Industries Ltd.
INTERPRETATION:
The liquid ratio can be improved by,
Increasing equity share capital
Retaining profits in business
Issue of debentures
Increasing long term loan
Increase long term fund as invested in all current assets except inventories
By increasing proportion of bank borrowings for working capital in current
liabilities
59
4.1.3 QUICK RATIO:-
Formula:
Quick ratio = Quick assets
Current liabilities
RATIO DISCRIPTION
Table 3: Quick ratio of Anupam Industries Ltd
YEAR 2009-10 2008-09
QUICK ASSETS 197011292 111869851
CURRENT LIABILITES 1259718925 1571808384
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 197011292
1259718925
= 0.16:1
2008-09 = 111869851
1571808384
= 0.17:1
60
Graph: Quick ratio of Anupam Industries Ltd.
INTERPRETATION:
Quick ratio is also called acid test ratio. It is the ratio between quick
current assets and current liabilities. It is calculated by dividing the quick
assets by current claim. Quick ratio is the measurement of firm‟s ability to
convert its current assets quickly into cash in order to meet its current claim.
The term quick assets refer to current assets, which can be converted into,
cash immediately or at a short notice without reduction in value of quick
ratio.
Quick assets =stock, due from societies, advances, trade and sundry
Debtors‟ cash and bank balance
The ideal quick ratio is 1:1. In ANUPAM INDUSTRIES ltd., the quick
ratio is less than one in both years. The reason is continuous increase in the
current liability.
61
4.2 LEVERAGE RATIO
In the short term creditors like bankers and suppliers of raw material;
are more concerned with firm‟s current debt-paying ability, on the other
hand, long-term creditors like debenture holders, financial institution are
more concerned with the firm‟s long term financial strength in fact a firm
should have short as well as long term financial position. To judge the long
term financial position of the firm is financial leverage or capital structure
ratios are calculated. These ratios indicated funds provided by owners and
lenders. As a rule, there should be an appropriate mix of debt and owner‟s
equity in financing the firm‟s assets.
The important liquidity ratios are as under,
4.2.1 DEBT TO EQUITY RATIO
4.2.2 TOTAL DEBT TO EQUITY RATIO
62
4.2.1 DEBT TO EQUITY RATIO
Formula:
D.T.E. = DEBT
EQUIT
RATIO DISCRIPTION
Table 4: Debt Equity ratio of Anupam Industries Ltd.
Particular 2009-10 2008-09
DEBT
Secured Loan 647746697 802087357
Unsecured Loan 32536000 7713069
Equity
Equity Share Capital 437943260 38042260
Reserves And Surplus 969573146 528949393
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 680282697
1407516406
= 0.48:1
2008-09 = 809800426
566991653
= 1.43:1
63
Graph: Debt Equity ratio of Anupam Industries Ltd.
INTERPRETATION:
High ratio indicates higher stake of outsiders in business compare to
stake of owners.
Debt equity ratio can be increase by, Increasing debenture or long term
loans or deferred payment liability decreasing equity losses.
The ratio can be reduced by reverse of above three measures. It can also be
reduced by conversion of loan/debenture into equity. It can also be reduced
by retaining of profits.
64
4.2.2 TOTAL DEBT TO EQUITY RATIO
Formula:
T.D.T.E. = TOTAL DEBT
EQUITY
RATIO DISCRIPTION
Table 5: Total Debt Equity ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
TOTAL DEBT
Secured loan 647746697 802087357
Unsecured loan 32536000 7713069
Current Liability 1019753303 521808384
EQUITY
Equity Share Capital 437943260 38042260
Reserves And Surplus 969573146 528949393
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 1700036000
1013367466
= 1.68:1
2008-09 = 1331608810
566991653
= 2.35:1
65
Graph: Total Debt Equity ratio of Anupam Industries Ltd.
INTERPRETATION:
The high total debt to equity ratio indicates higher stake of outsiders in
business compare to stake of owners.
Total debt to equity ratio can be decrease by,
Reduction in term borrowings
Reduction in funds by utilizing fresh equity proceeds
Reduction in retain profits
Reducing level of credit given to customers & by availing lesser credit period
from suppliers
By increase of equity due to fresh issue or due to retain profits
By conversion of debentures/loans into equity
66
4.3 PROFITIBILITY RATIO
A company should earn profit to survive and grow over a long period.
Profit are essential but it would be wrong to assume that every action initiated
by management of a company should be aimed at maximizing profits
irrespective of social consequences and profits is looked upon as a term of
above since some firms always want to maximize profits at due cost of
employees , customers, and society. Except such infrequent cases, it is fact
profit must be earned to sustain the operation of the business to be able to
obtain funds from investors for expansion and growth and to contribute
towards the social overhead for the welfare of society.
Profit is the difference between revenues and expenses over a period.
Profit is the ultimate output of the company; and it will have no future if it
fails to make sufficient profits. Therefore financial manager should
continuously evaluate the efficiency of its company in term of profits.
Generally, two types of profitability ratios are calculated.
Profitability in relation to sales Profitability in relation to investment.
The important profitability ratios are as under,
4.3.1 GROSS PROFIT TO SALES RATIO
4.3.2 NET PROFIT TO SALES RATIO
4.3.3 OPERATING PROFIT RATIO
67
4.3.1 GROSS PROFIT RATIO
Formula:
G.P. = GROSS PROFIT × 100
SALES
RATIO DISCRIPTION
Table 6: Gross Profit ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
SALES 2882500463 1939609532
LESS: COST OF SALES
Add: employee cost 109858432 78957623
Manufacturing exp. 66565737 63564635
Material consume 1969680757 1307620591
Increase/(decrease) in stock (167754199) (1376656)
Gross profit 1157006645 663851613
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 115700645 ×100
2882500463
= 40%
2008-09 = 663851613 ×100
1939609532
= 34.23%
68
Graph: Gross Profit ratio of Anupam Industries Ltd.
INTERPRETATION:
Improvements in G.P. to sales ratio can be due to following,
Sales price has been increase due to better market condition/better competitive
position.
Reduction in raw material cost per unit of production due to use of lower
quality of raw material.
Reduction in wages cost can be due to voluntary wages cut or change in labor
reward policy leading to higher efficiency.
Reduction in cost of power and fuel due to reduction in rate per unit charged.
Reduction in gross profit can be due to following reasons,
Reduction in administrative cost to sales ratio
Reduction in interest cost to sales ratio
Reduction selling & distribution cost to sales ratio
69
4.3.1 NET PROFIT RATIO
Formula:
N.P = NET PROFIT × 100
SALES
RATIO DISCRIPTION:
Table 7: Net Profit ratio of Anupam Industries Ltd
PARTICULARS
2009-10 2008-09
Sales
2882500463 1939609532
Net Profit
440558680 226395326
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 440558680 ×100
2882500463
= 15.28%
2008-09 = 226395326 ×100
1939609532
= 11.67%
70
Graph: Net Profit ratio of Anupam Industries Ltd.
INTERPRETATION:
Favorable change in Net profit ratio can be due to,
Reduction in tax rate
Obtaining of some relief/allowance/reduction in tax liability.
Unfavorable change could take place due to reverse of above situation.
Reduction in profitability may not conclusively establish inefficiency of
management since when market conditions are bad even most efficient
person may not be able to make profits. In very bad conditions, a business
concern may able to manage break even or only marginal losses can be
termed as efficient. Low profit in teething period, due to introduction of new
product, depression/recession period can be justified. Losses/low profits due
to accident/mishap can be excused.
71
4.3.1 OPERATING PROFIT RATIO
Formula:
O.P. Ratio = NET PROFIT + TAX
SALES
RATIO DISCRIPTION
Table 8: Operating Profit ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
Sales 2882500463 1939609532
Net Profit 440558680 226395326
Tax 255129504 107205801
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 440558680+255129504×100
2882500463
= 24.13%
2008-09 = 226395326+107205801 ×100
1939609532
= 17.20%
72
Graph: Operating Profit ratio of Anupam Industries Ltd.
INTERPRETATION:
Change in operating profit ratio can be due to following reasons apart from
the reasons of change in gross profit ratio.
The ratio can be improved due to reduction in administrative cost to sales
ratio
Reduction in interest cost to sales ratio
Reduction in selling & distribution cost to sales ratio
Increase in miscellaneous income, income from investment, rent income from
rented portion of premises
The increase can also be due to abnormal gains, refund of expenses paid in
previous year due to favorable court judgment
By improvement in sales with expenses constant/rise it a low percentage
compare to percentage increase in sales
73
4.4 MANAGEMENT EFFICIENCY RATIO:
These ratios are concerned with measuring the efficiency in assets
management. These ratios are also called asset utilization ratios. The
efficiency with which the assets are used would be reflected in the speed and
rapidly with which assets are converted into sales. The greater is the rate of
turnover or conversion the more efficient is the utilization of assets, other
thing being equal. For this reason, such ratios are also designed as turnover
ratios. An activity ratio may therefore be defined as a test of the relationship
between sales and various assets of the firm.
Depending upon the various types of assets
The important management efficiency ratios are as under,
4.4.1 DEBTORS TURNOVER RATIO
4.4.2 CREDITORS TURNOVER RATIO
74
4.4.1 DEBTORS TURN OVER RAIO
Formula:
D.T.R. = CREDIT SALES
DEBTORS + BILLS RECEIVABLES
Debtors velocity ratio = DEBTORS + BILLS RECEIVABLES × 365
CREDIT SALES
RATIO DISCRIPTION
Table 9: Debtors Turnover ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
DEBTORS 1668520305 1112394029
BILLS RECIVABLES - -
CREDIT SALES 2882500463 1939609532
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
PARTICULARS
2009-10 2008-09
D.T.R = 2882500463
1668520305+0
= 1939609532
1112394029+0
= 1.73 times = 1.74 times
D.V.R = 1668520305+0 *365
2882500463
= 1112394029+0 *365
1939609532
= 211 days = 209 days
75
Graph: Debtors Turnover ratio of Anupam Industries Ltd.
INTERPRETATION:
The ratio gives number of days the receivables are outstanding.
Another ratio to see reasonableness of receivables is to see turnover of
receivables. The ratio is calculated as above.
The higher the turnover & lower the turnover day‟s receivables better it is.
However higher turnover/lesser number of receivables days should not be at
cost of sales/profitability. If period of credit is reduced by offering high cash
discount, the same is not a matter to be appreciated.
76
4.4.2 CREDITORS TURNOVER RATIO
Formula:
C.T.R. = CREDIT PURCHASE
CREDITORS + BILLS PAYABLES
Creditors Velocity Ratio = CREDITORS + BILLS PAYABLES × 365
CREDIT PURCHASE
RATIO DISCRIPTION
Table 10: Creditors Turnover ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
CREDITORS 756104295 320753976
BILLS PAYABLES - -
CREDIT PURCHASE 1969680757 1307620591
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
PARTICULARS 2009-10 2008-09
C.T.R = 1969680757
756104295+0
= 1307620591
320753976+0
= 2.61 times = 4.08 times
C.V.R = 756104295+0 ×365
1969680757
= 320753976+0 ×365
1307620591
= 140 days = 90 days
77
Graph: Debtors Turnover ratio of Anupam Industries Ltd.
INTERPRETATION:
The ratio gives credit obtains from suppliers in number of days.
The adequacy of credit obtained is also measured by credit purchased
creditors for goods× bills payable.
Higher the numbers of day‟s credit obtain or lesser the turnover of the
creditors better is ability to obtain credit.
However higher credit obtain should not be at cost of high purchase cost, low
quality, spoiling goodwill amongst suppliers.
If credit period is reduced by availing substantial cash discount, the same is
appreciable.
78
4.5 RETURN RATIOS
The important return ratios are as under,
4.5.1 RETURN ON EQUITY
4.5.2 RETURN ON LONG TERM FUND
4.5.1 RETURN ON EQUITY
Formula:
R.O.E. = NET PROFIT ×100
EQUITY
RATIO DISCRIPTION
Table 11: Return on Equity ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
NET PROFIT 440558380 226395326
EQUITY 437943260 38042260
RESERVR & SURPLUS 969573146 528949393
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 440558380×100
437943260+969573146
= 43.92%
2008-09 = 226395326 ×100
38042260+528949393
= 39.93%
79
Graph: Return on Equity ratio of Anupam Industries Ltd
INTERPRETATION:
The ratio is broken up in three parts,
NET PROFIT × SALES × ASSETS
SALES ASSETS EQUITY
The improvement in the ratio can be brought about by increasing ratio
of net profit to sales.
By increase in sales with better utilization of assets & by reducing share
of equity in financing assets. i.e. trading on equity- only if rate of earning is
higher than net cost of funds (after tax)
The reduction ratio could come due to reverse situation than above.
Justification for low rate of return on equity;
1. troubles of a new business concern
2. New product development period
3. Interest cost has gone up due to hike in interest rate reduction in tax rate.
80
4.5.2 RETURN ON LONG TERM FUND
Formula:
R.O.L.F. = PROFIT BEFORE TAX+INTEREST (1-TAX RATE) ×100
EQUITY+LONG TERM FUND
RATIO DISCRIPTION
Table 12: Return on Long term ratio of Anupam Industries Ltd
PARTICULARS 2009-10 2008-09
Profit Before Tax 695687884 343211127
Interest 139012450 105345308
Tax Rate 30% 30%
Equity 437943260 38042260
Long Term Fund - -
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
2009-10 = 695687884+139012450 (1-30%) ×100
437943260+0
= 11.51%
2008-09 = 343211127+105345308 (1-30%) ×100
38042260+0
= 5.98%
81
Graph: Return on Long term ratio of Anupam Industries Ltd
INTERPRETATION:
The improvement in the ratio can be brought about by,
Improving profit before tax
Reduction in tax rate
Reduction in long term funds including equity
82
CHART OF RATIOS
Ratios 2009-10 2008-09
Gross Profit Ratio
40.14%
34.23%
Net Profit Ratio
15.28%
11.67%
Operating Ratio
75.83%
80.77%
Operating Profit Ratio
24.13%
17.20%
Current Ratio
2.20:1
2.57:1
Liquid Ratio
1.72:1
2.14:1
Quick Ratio
0.16:1
0.18:1
Debtors‟ Ratio
1.73 Times
1.74 Times
Debtor‟s collection period
211.28 Days
209.33 Days
Creditors‟ Ratio
2.61 Times
4.08 Times
Creditor‟s payment period
140.11 Days
89.53 Days
Debt- Equity Ratio
0.48:1
1.43:1
Total Debt-Equity Ratio
1.28:1
2.34:1
Return on Equity
31.30%
39.93%
Earnings Per Share
115.81 Per share
59.51 Per share
83
84
SWOT ANALYSIS OF ANUPAM INDUSTRIES LTD.
STRENGTH WEAKNESS
Highly equipped production shop.
Better infrastructure.
Reputation in manufacturing crane
lined equipment
Provide better quality in accordance
with customer requirement. By taking
just in time delivery approach
Product caters to all requirements in
all fields
Prices vary through competition in
these segments, Law margins.
Customer expectations in terms of
delivery, discount and customization
are very high.
No focus from regional offices. All
enquires and subsequent follow up
divert to HEAD OFFICE.
Delivery adherence
85
OPPORTUNITY
THREATS
Vast potential in the market.
Pneumatic valves are increasingly
becoming a part of every process
module as the market moves towards
automation.
After sales services and complaint
management
Establishing a dealer network shall
enable better focus on these products.
Small scale , low cost competitors are
thronging in the market and eroding
our share with product of comparable
performance
Different competitors for different
segments.
Market driven by prices and delivery.
Cheap Chinese/ South East Asian
imports.
Competition from various
competitors, especially Elicon.
86
Findings
1. Through the study I found that awareness regarding company‟s financial information.
2. It is found that company‟ position is well than past year because their management is
good.
3. Winning the heart by quality product to the final user who have order according to
demanded.
4. Anupam group has developed the think tank who continuously updates strategy in the
right direction. Think win-win & Stay ahead with us.
5. Company‟s profit is more than past year.
6. Mostly company produce these products only for the pulling a heavy bugs to change
its place safely.
7. Company has no need to give any advertisement for their increase in profit because
mostly the other company knows this company.
8. The market is not available in all over India so they try to deliver their product slowly
in all over India.
9. Assets are expected to produce higher future revenues.
10. Recently company has acquired more space where it‟s entire production `
and storage unit will be shifted.
87
Conclusion
Financial term and Operation of that company that is manufacturing is very
important for the company. We know that financial statement of a business organization
are very useful to different parties such as management, shareholders, creditors, investors,
banks, financial institution, government authorities etc. Information provided in the
financial statements serves no purpose unless it is analyzed and interpreted in some
comparable terms. To obtain the data analysis and interpretation of the data, it can be done
with the help of working capital and ratio analysis. It is important tool for financial
analysis and it is used as yardstick for examine the financial position of any business
organization.
An Anupam industry limited is a well established organization in the field of
CRANE manufacturing since last 3 decades. It has an enormous popularity in this field.
The profitability ratio of the company indicates a good position. Anupam
industries limited‟s liquid position is also good. This shows that company is capable of
meeting its short term resources.
The position of the solvency ratio of the company is also good at the composition
of a capital of a business and proportion of owner‟s capital.
Operating ratio decrease from 80% to near 75% which is very good sign for the
company it shows the how efficiency increases of the management. And the operating
profit ratio increase almost by 7% it is good for the company.
In 2009-10 the company„s unsecured loan increase its show the company‟s market
reputation. On the basis of the data analysis and interpretation we can say that the
company‟s management is very efficient and active.
Thus overall position of the company is satisfactory and up to the standard.
88
Suggestions
Company should reduce its administration expenses because gross profit is around the
40% and the net profit is around the 15% of the net sales. Company should increase
its net profit by reducing the administration expenses.
Company‟s current ratio showing decreasing trend but still in year 2009-10 the ratio is
2.20:1 which is high. Company have much current assets as compare to the current
liability company should find out the investment proposal for the short period which
is generate the income and also the that investment is flexible so it easily convert in
the benefit of the company. Company should maintain a standard level and other
current assets should not remain idle in company.
Company should improve its quick ratio. Company should maintain 0.5:1 as per the
standard or around there. Because company quick ratio is almost 0.16:1. That is not
good. Company should maintain its cash level or increase cash holding in bank.
Company‟s debtor‟s ratio and debtor‟s collection period is need to improve. For that
company should need to improve the credit policy of the company.
Company need to improve its Return on equity ratio. In the year 2009-10, the ratio is
around 31%. And in the year 2008-09, the ratio around 39%. It is show that
company return on equity ratio is decreasing trend. Company need to improve ratio.
Return on equity attract the investors I the company and such decreasing trend
investor may hesitate in investing in the company.
89
Bibliography
References:
Pandey, I.M. (2010), “Financial Management”, 10th edition, Vikas publishing house
pvt. Ltd, Delhi
Amrish Gupta (2008), “Financial Accounting for Management”, 3rd
edition, Kindersley
(India) pvt. Ltd, licensees of Pearson education in south Asia.
Websites:
www.anupangroup.com
Other Reference:
Annual report of the Anupam industry year 2009-10 & 2008-09
90
ANNEXURE
DIRECTOR‟S REPORT
Information required the under Section 217(1) (e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988:
1. CONSERVATION OF ENERGY:
a) Energy Conservation measures taken:-
Constant improvements are being effected in the manufacturing process to aid
energy conservation and this has been taken up, as an ongoing exercise
b) Additional investment and proposals, if any, being implemented for reduction of
consumption of energy:
No major specific investments were made during the year under review and there are
no plans for additional investment for reduction of power in the coming year.
c) Impact of the measures at (a) & (b) above for reduction of energy consumption and
consequent impact on the cost of production of goods:
Implementation of the above referred measures taken of energy conservation has
resulted in reducing consumption of power and fuel.
2. TECHNOLOGY ABSORPTION:
I. RESEARCH & DEVELOPMENT:
a) Specific areas in which R&D carried out by the Company:
The company has started a new vertical namely standard Crane kits and Hoists. This
activity requires development of designs and specifications and validation of design
by continuous testing.
91
b) Benefits derived as a result of above R&D:
Benefits are expected to flow on commencement of marketing of standard Cranes
Kits and Hoists. The Company will also be in a position to incorporate in –house
designed modular cranes in their supplies to customers, besides setting up an
independent marketing arrangement for this segment.
c) Future plan of action:
The Company has no specific plans on R&D
d) Expenditure on Research & development:
Since the company does not have separate R&D Cell, there is no distinct expenditure
under the head Research and Development.
II. TECHNOLOGY ABSORPTION:
a) The technology absorption from the Russian partner in respect of Salem steel Plant,
Salem order execution was put into use and concludes successfully with erection of 7
cranes out of the total 11 cranes at Salem steel plant site.
Likewise, the design assistance from TM Crane-Export Limited, Cyprus was
converted into the manufacturing drawings and all crane suppliers to Steel Authority
of India Limited, IISCO, and Burnpur completed before 31-03-2010
b) Benefits derived as a result of the above efforts:
Improvement in quality of product and climb up in value chain has been achieved
besides registering a solid presence in the important ladle crane segment.
The company now has emerged as one of the very few Indian manufacturers for supply of
large ladle cranes for steel plants and in general, melting shops. This will enable the
92
company to continue to remain one of the prequalified vendors for supply of large ladle
cranes.
c) Technology imported during the last five years: During the year under review all the
design and manufacturing drawing from ALFA, S.R.L., and Italy for two types of
Tower cranes was put into use and 1st batch of Tower cranes made with the imported
licensed drawings/technology.
III. FOREIGN EXCHANGE EARNING AND OUTGO:
Foreign exchange earned by the company during the year amounted to current years
Rs. NIL (Previous years Rs.1, 38, 05,534/-). Expenditure in foreign currency during
current year amounted to Rs. 23, 14, 66,108 (previous years Rs.7, 30, 23,773/-),
including remittances for design help and capital imports, details of which are given
in Notes to Accounts.
93
AUDITOR‟S REPORT
1. The auditors have audited the attached balance sheet of Anupam Industries Limited as at
31st March 2010, the profit and loss account and the cash flow statement of the company
for the year ended on that date, both annexed thereto. These financial statements are the
responsibility of the company‟s management.
2. They conducted their audit in accordance with the auditing standard generally accepted in
India. Those standards require that they plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and the
disclosures in the financial statement. An audit also includes assessing the accounting
principles used and the significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that their audit provides a
reasonable basis for their opinion.
3. As required by the companies (Auditors Report) order, 2003 issued by the Central
Government of India in terms of section 227(4A) of the Companies Act, 1956, they give in
the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
4. Further to our comments in the Annexure referred to above, they report that:
i. They have obtained all the information and explanation which to the best of our
knowledge and belief were necessary for the purpose of our audit;
ii. In their opinion, proper books of account as required by law have been kept by the
company as far as appears from their examination of those books.
iii. The Balance Sheet, the Profit and Loss account and the Cash Flow Statement dealt
with by this report are in agreement with the books of accounts;
In their opinion, the Balance Sheet, the Profit and Loss account and the Cash Flow
Statement dealt with by this report are in compliance with the accounting standards
referred to in section 211(3C) of the Companies Act,1956;In their opinion and to the best
of our information and according to the explanations given to us, they said accounts give
94
the information required by the Companies Act,11956, in the manner so required and give
a true and fair view in conformity with the accounting principles generally accepted in
India.
i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st
March 2010.
ii. In the case of the Profit and Loss account, of the profit for the year ended on that
date; and
iii. In the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.
5. On the basis of written representations received from the Directors, as on 31st March
2010 and taken on record by the Board of Directors, we report that none of the
Directors is disqualified as on 31st March 2010 from being appointed as a director in
terms of section 274(1)(g) of the Companies Act, 1956.
95
COMMON SIZE STATEMENT
Table: 16
Particulars 2009- 2010 In% 2008-2009 In %
SOURCES OF FUNDS
Share Capital 437943260 12.96 38042260 18.83
Reserves &surplus 969573146 28.71 528949393 26.19
Secured Loans 647716697 19.18 802087357 39.71
Unsecured Loans 32536000 0.96 7713069 0.38
Differed tax liabilities 29385923 0.87 16345194 0.81
Liabilities:
Current Liabilities 1019753303 30.20 521808384 25.83
Provisions 239965622 7.11 105000000 5.20
Total 3376873951 100 2019945657 100
APPLICATION OF
FUNDS
Fixed Assets 567611107 16.81 372118422 18.42
Capital work in progress 339615 0.010 32912948 1.63
Investment 19900000 0.59 1218950 0.06
Inventories 600169056 17.77 274038795 13.57
Sundry Debtors 1668520305 49.41 1112394029 55.07
Cash & Bank Balance 197011292 5.83 111869851 5.54
Loans & Advances 301733690 8.94 115392662 5.71
Miscellaneous
expenditure
(to the extent not written
off or adjusted)
21588886 0.64 -
P & L( debit) 177300000 5.25 -
Total 3376873951 100 2019945657 100
Source: Annual Report-2008-09, 2009-10 of Anupam Industry
.
96
Financial Results:
Table: 17
Particulars 2009-10 2008-09
Net Sales and Erection & other Charges 30254.99 20336.60
Other Income 69.35 21.20
Operational Expenditure 21570.90 15781.62
Profit before tax, interest & depreciation 8753.44 4576.18
Less: interest & financial Charges( Net) 1390.12 1053.45
Depreciation 406.44 90.62
Profit before tax 6956.88 3432.11
Less: Provision for tax including FBT 2510.40 1164.98
Profit after tax 4446.48 2267.13
Less: Short provision for tax in earlier year 40.89 3.18
Add: Balance B/F from previous year 18.66 4.71
Amount available from appropriation 4424.25 2268.66
Proposed dividend on preference share included
dividend tax
0.06
Transfer to General Reserve 4250.00 2250.00
Balance carried forward 174.19 18.66
Source: Annual Report-2008-09, 2009-10 of Anupam Industry