annual report analysis - maruti suzuki ltd 2 (1)
TRANSCRIPT
ICFAI BUsiness School, gurgaon
Annual Report Analysis
Maruti Suzuki Ltd
Meetali Singh Naman Popli
Nishant Ritika Suri
Sakshi Kalra9/7/2009
Table of ContentsIntroduction......................................................................................................................................3
Brief History.....................................................................................................................................4
Products and Services...................................................................................................................5
Management Team.........................................................................................................................5
Shareholding Pattern......................................................................................................................6
Achievements..................................................................................................................................7
Performance Overview (2008 – 2009).........................................................................................8
Industry Overview.......................................................................................................................8
Company Overview..................................................................................................................11
Company’s Financial Performance.........................................................................................12
Analysis – Key Points.......................................................................................................................13
Auditor’s Report............................................................................................................................15
Director’s report for the year ended 2008-09..................................................................................16
Ratio Analysis................................................................................................................................19
Comparative Balance Sheet and Profit and loss account.......................................................34
Common size Balance sheet and Profit and loss.....................................................................46
INTERPRETATION......................................................................................................................51
Annexure…………………………………………………………………………………..57
Individual contribution…………………………………………………………………..62
Introduction
Maruti Suzuki Limited
“We expect that A-star will enable our company to reach a different level in our exports. Last
year, Maruti Suzuki exported 53,000 cars to over 40 countries. This was the highest ever
annual export in our history. However, with the A-star, we are targeting to make a quantum
jump, and scale up our exports to around 200,000 cars in 2010-11.”
– Shinzo Nakanishi,
Managing Director and CEO, Maruti
On 19th Nov 2008, India’s largest car maker, Maruti Suzuki launched its strategic model ‘A-
star’ a Euro V compliant model in A-segment to explore new markets in domestic as well as
overseas and primarily to boost its exports in the coming years. A-star is the fifth world
strategic model of its parent company Suzuki, as a part of its global market strategy for small
cars segment and to leverage the low cost manufacturing capabilities of the company. This
car has been designed to keeping in mind aspirations of the urban environment conscious
customers. Company has used latest technologies to make it as most fuel efficient petrol
car. In addition it represents a green car, capable of being 85% of it being recycled. This
would help to make the car more acceptable.
With this launch company has the opportunity to re-launch itself in the European markets,
which it had left two years back because lack of suitable model. Now it is targeting a yearly
volume of 100,000 in Europe and other parts of the world. Company had already entered
into an export contract for this new model, with Nissan a European auto giant. Company
sources believe that this would take its exports to around 200,000 cars by FY 11. In
domestic front also, company expect this model to be well accepted of its sporty and
compact look, matching with the earlier success full launched models Swift, Dzire, and SX4.
The company had already built a new technology world class manufacturing facilities at
Manesar to manufacture one million units per year. In partnership with Adani Group
Company build new export cargo infrastructure facilities to support its ambitious export
plans. Maruti Suzuki wants to celebrate their silver jubilee by exploring new growth
opportunities with this launch and plans to maintain its leadership position which it has for
the last 25 years in the domestic market of Indian Automobile Industry.
Brief History
Maruti Suzuki India limited (MSIL) is the largest passenger car manufacturer in India with a
market share of over 50%. MSIL formerly Maruti Udyog Limited (MUL) was established in
Feb 1981 through an act of parliament, as a government company with Suzuki Motor
Corporation of Japan holding 26 per cent stake. Its actual production commenced in 1983
with the Maruti 800 car based on the Suzuki Alto keicer, which was the only modern car
available in India at that time; its only competitors were Hindustan Ambassador and Premier
Padmini. Till 2004, it remained India’s largest selling compact car ever since its launch while
MSIL remained the Indian car market leader for over two decades. In 2002, Government of
India (GOI) ceded majority control to Suzuki through rights issue. The GOI subsequently
sold 25.6% of its stake to investors in an IPO. Now, Suzuki owns 54.21% of Maruti.
Suzuki chose Maruti to be its small car-manufacturing hub for the European market and also
as an R&D center. Currently, Maruti offers a gamut of cars – from entry level Maruti 800 &
Alto to stylish hatchback A-Star, Swift, Wagon R, Estilo and sedans DZire, SX4 and Sports
Utility Vehicle Grand Vitara. MSIL has two state-of-the-art manufacturing facilities in India.
The Gurgaon Facility (300 acres)
Gurgaon facility houses three fully integrated plants. The three plants have a total installed
capacity of 350,000 cars per year. Several productivity improvements or shop floor kaizens
over the year have enabled the company to manufacture nearly 700,000 cars per year at the
Gurgaon facility.
The Manesar Facility (600 acres)
Manesar facility is designed to suit Suzuki Motor Corporation (SMC) and Maruti Suzuki India
Limited’s (MSIL) global ambitions. The plant was inaugurated in February 2007. The World
Car derived from concept A-Star would be manufactured here. At present the plant rolls out
World Strategic Models – Swift, SX4, and DZire. The plant has several in-built systems and
mechanisms. The plant at Manesar is the company’s fourth car assembly plant. It started
with an initial capacity of 100,000 cars per year and presently increased to 170,000 cars per
year.
Diesel Engine Facility at Manesar
The factory is situated about 20 kilometers away from the Gurgaon car plant. The diesel
engine factory currently manufactures one-lakh engines, which is slated to scale to 3 lakh by
2010 with an investment of Rs.2500 crore.
Products and ServicesMaruti offers a gamut of products, ranging from Maruti 800, Maruti Omni, Gypsy, Wagon-R,
Maruti Versa, Maruti Zen Estilo, Maruti Suzuki Swift, Maruti Suzuki SX4, Suzuki Grand
Vitara, and Maruti DZiRE. Currently, Maruti Alto is the largest selling car in India. Maruti A-
star was launched in December 2008. The upcoming model of MSIL is Maruti Splash, which
will be ready to run on the roads next year. Maruti has an unparalleled service network in
India. To ensure the vehicles they sold are serviced properly, Maruti has 2628 listed
Authorized Service Stations and 30 Express Service Stations on 30 highways across India.
Maruti provides vehicle insurance (launched in 2002) to its customers in association with the
National Insurance Company, Bajaj Allianz, New India Assurance, and Royal Sundaram. As
part of its corporate social responsibility, Maruti Udyog launched the Maruti Driving School in
Delhi. Later these services were extended to other cities of India as well.
Management Team
Designation NameChairman R C BhargavaManaging Director & Chief Executive Officer
Shinzo Nakanishi
Director Amal GanguliTsuneo OhashiKeiichi AsaiShuji OishiOsamu SuzukiKenichi AyukawaDavinder Singh BrarPallavi ShroffManvinder Singh Banga
Shareholding Pattern
54.21%
2.75%
15.83%
20.73%
6.48%
Shareholding Pattern
Promoter & Promoter GroupMutual Funds / UTIFinancial Institutions / BanksForeign Institutional InvestorsNon-Instituions
Achievements
The Company is featured at 49th rank among the world's most reputed companies in the
annual World's Most Reputed Company Survey - 2009. In the passenger car sector, the
Company is ranked 3rd.
Some of the other awards/recognition won by the Company during the year are:
The Company stands 5th in all India ratings in the TNS Corporate Reputation Index
and tops the ratings in the auto sector, at first position.
JD Power Customer Satisfaction Award for the 9th time in a row.
Zigwheels “Car of the year” award for “A-star”.
“A-star” rated as the best small car of the year by Autocar- UTVi
CNBC TV18 Overdrive awards for :-
Automotive technology of the year for newly launched K10 B Engine)
Manufacturer of the year)
Special commendation to the Company for its contribution to the Indian auto
industry, a tribute to the Company's silver jubilee.
CNBC AWAAZ Con summer Award 2008 i n the automobiles category for the most
preferred brand of cars.
National award for best value engineering organization in India at the INVEST (Indian
Value Engineering Society).
Performance Overview (2008 – 2009)
Industry Overview
The financial year 2008-09 witnessed unprecedented fluctuation in the macroeconomic
environment both globally and in India. The Indian economy was less affected and managed
to grow well above 6%. Within the year, there was a huge swing in business and
consumption sentiment with the growth rates steeply declining in the second and third
quarters and then showing some recovery in the fourth quarter.
Car loans, which are a critical growth driver for the industry, saw a major curtailment by
banks and finance companies, owing to a liquidity crunch and court directives against forced
repossession of financed assets during default. Most commodity prices went up and this hurt
the profits of manufacturing businesses and disposable incomes of households alike. The
news of gloom and doom in the global economy also depressed consumer sentiment and
customers adopted a 'wait and watch' approach before making discretionary purchases. All
these factors hit the passenger vehicle industry severely and it could barely manage to
remain flat after six years of robust growth.
Table1: Industry Growth - The flatness in growth was actually an aggregate of huge quarterly swings
Table 2: Industry Growth - How did car sales move across India over time
Table 3: Auto Industry Growth: Indian Automobile Domestic Sales Growth Rate (%)
Table 4: Domestic Market Share for 2008-09
15.96% 3.95
%3.60
%
76.49%
Category-Wise Market Share in 2008-2009
Passenger VehiclesCommercial VehiclesThree WheelersTwo Wheelers
Company Overview
Company’s Financial Performance
The year 2008-09 witnessed a multiplicity of challenges, coming together at the same time.
In most economic cycles, commodity prices generally move in tandem with the demand
growth scenario. This year, inflation control measures by the government and lack of retail
financing impacted the revenues of vehicle manufacturers, even when the commodity prices
were at their lifetime high. Adverse foreign exchange movements also had a substantial
impact on the company as the yen appreciated by almost 30% against the rupee in a year’s
time and this raised the cost of the company’s imports.
The measures taken by the Government of India for providing the liquidity and improving the
customer sentiments through the policy cuts, cenvat rate reduction in the later part of the
year helped in mitigating the adverse impact of these factors. With the focused efforts in the
market and cost and operational efficiencies, the company managed to generate net sales of
Rs 203,583 million in FY ‘0809 as compared with Rs 178,603 million in FY ‘0708 showing
growth of 14.0%
Sales of vehicles in the domestic market increased to 722,144 as compared to 711,818 in
the previous year showing a growth of 1.5%. Exports of vehicles grew at an impressive rate
of 32% from 53,024 to 70,023 in the current year. The overall growth was 3.6% which was
achieved in spite of the difficult economic and market conditions prevailing particularly in the
latter half of the year due to the global financial and economic crisis which did not spare the
Indian economy. The Company made all out efforts to mitigate this impact undertaking
measures to curtail cost in various areas of its business operations. Earnings before
depreciation, interest, tax and amortization (EBDITA) stood at Rs. 24,333 million against Rs.
31,308 million in the previous year. Market share went up from 45.9% to 46.5% in passenger
vehicles overall.
Highlights FY ‘09
Parameters FY ‘09 FY ‘08 Change
Net Sales 203,583 178,603 13.99%
Other Income 9,985 8,371 19.28%
EBIDTA 24,334 31,30 (22.03)%
PBT 16,759 25,030 (33)%
PAT 12,187 17,308 (29.6)%
(Rs in Mn)
Annual Performance Ratios (As a Percentage of Net Sales)
Parameters FY ‘09 FY ‘08 Change
Material cost 79.78% 76.41% 3.37%
Manufacturing & Admin Expense
Power & Fuel
Royalty
7.70%
0.95%
3.3%
6.0%
0.82%
2.8%
1.37%
0.13%
0.50%
Selling and Distribution Expenses
Transportation costs
3.63%
1.44%
3.14%
0.91%
0.49%
0.53%
Employee cost 2.31% 1.99% 0.32%
EBIDTA 11.95% 17.53% (5.58)%
Depreciation 3.47% 3.18% 0.29%
PBT 8.23% 14% (5.77)%
PAT 5.99% 9.69% (3.70)%
Other Income 4.90% 4.69% 0.21%
Analysis – Key Points
1. Net Sales : up by 13.99 %: increase in volumes
2. Average Realization: up by 9.4 %: Higher product mix, higher market share in A3.
3. Income from Services: up by 27.8%: Increase in sales of extended warranty
packages and pre-owned cars.
4. Other Income: up by 19.3%: Higher returns on liquid surplus, sale of scrap due to
increase in steel prices.
5. Material Cost up 337 bps
a. Forex Impact on direct & indirect imports
b. Commodity price increase
6. Mfg Admin & other expenses up by 170bps
a. Running Royalty: Higher by Rs 1900 Mn( product mix), forex
b. Power & Fuel: Higher by Rs 460 Mn, product mix shift towards Manesar
facility: runs on High Speed Diesel
c. Exchange Variation: Rs 1338 Mn loss on forward contract
7. Selling & Distribution Costs up by 49 bps
a. Transportation cost up by Rs.1300 Mn
8. Employee Costs up by 32 bps
a. Increase in R&D manpower
9. Depreciation Costs up by 30 bps
a. K –Series engine plant
b. One million vehicle production capacity
Auditor’s Report
As per the auditors (Price Waterhouse), the financial statements together with the notes, 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 2009;
(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.
The auditors neither came across any instance of fraud on or by the Company, noticed nor reported during the year, nor have they been informed of such case by the management.
Director’s report for the year ended 2008-09
1. DIVIDENDS
The board recommends a dividend of Rs. 3.50 per equity share of Rs. 5 each for the year ended 31 March 2009 amounting to Rs.1011 million.
2. SHIFTING OF REGISTERED OFFICE The registered office of the Company was shifted from 11th Floor, Jeevan Prakash, 25, Kasturba Gandhi Marg, New Delhi -110 001 to Company's owned premises at 1, Nelson Mandela h Road, Vasant Kunj, New Delhi- 110 070 with effect from 15December 2008.
3. QUALITY The Company has again been awarded ISO: 27001 certification by STQC Directorate (Standardization,Testing & Quality Certificate), Ministry of Communications and Information Technology, Government of India after re-assessment. The Company is thus certified to meet international standards for maintaining information security. The Company also has an ISO 14001:2004 certification which has been similarly awarded once again on re-assessment by AIB-VincotteInternational Ltd., Brussels, Belgium.The Company's plants at Gurgaon and Manesar are ISO: 9001certified. The Company is subject to re-assessment at regular intervals for re-certification.The Company's press shop has TS 16949 certification whichis subject to re-assessment at regular intervals.
4. HUMAN RESOURCE DEVELOPMENT
The Company has always focused on employees' development. A total of 38000 man-days of training were conducted for employees across all levels with an average training of 5 days per employee during the year. The Company has spent about Rs. 95 million on training of its employees during 2008-09. The training programs vary for employees at different levels. With the aim of encouraging a competitive spirit and a winning attitude to take on future challenges among the employees in the technical and supervisory band, programs such as “Winning Strategy”, “Chunauti” and “Ahead Forever” are held. Similarly, for employees at executive and senior executive levels, program based on six sigma, lean manufacturing, negotiation skills, MSproject, finance management and vehicle financing, value stream mapping, project management, quality control tools, neuro linguistic skills, innovation and creativity, corporate business etiquette, communication and presentation skills, etc. are held. For employees at top management level, programs based on leadership, business strategy, etc. are held. The Company also has higher education schemes for its employees.
5. DIRECTOR’S RESPOSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act,1956, your directors confirm:
a. that there were no material departures in the applicable accounting standards followed while preparing the annual accounts;
b. having selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c. having taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
d. having prepared the annual accounts on a going concern basis.
6.PERSONNEL
As required by the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in Annexure B to the Directors' Report. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the annual report is being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.
7. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on consolidated financial statements read with Accounting Standards AS -23 on accounting for investments in associates and AS - 27 on financial reporting for interest in joint ventures, the audited consolidated financial statements are provided in the annual report.
8.SUBSIDIARY COMPANIES AND THEIR ACCOUNTS
The Company's six subsidiaries i.e. Maruti Insurance Business Agency Limited, Maruti Insurance Distribution Services Limited, Maruti Insurance Agency Solutions Limited, Maruti Insurance Agency Network Limited, Maruti Insurance Agency Services Limited and Maruti Insurance Agency Logistics Limited are engaged in the business to sell motor insurance Policies to owners of Maruti Suzuki vehicles.In 2008-09, the insurance business generated a total income of Rs. 1152.82 million which includes dividend income of Rs. 37.35 million earned from investments in mutual funds.Profit before tax (PBT) for 2008-09 was Rs. 498.80 million. The total new policies issued during the year were 662,606 while 1,459,328 policies were renewed.
The seventh subsidiary namely True Value Solutions Limited has contributed towards smooth operations of business processes and supported the dealerships in enhancing the sale of certified pre-owned cars under the brand 'Maruti True Value'. It has contributed significantly to the efforts of customer retention by facilitating re-purchase of new cars and has made significant contribution towards enhancing dealers' profitability. In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the balance sheets, profit & loss accounts, reports of the board of directors and auditors of the subsidiary companies have not been attached with the balance sheet of the Company. These documents will be made available upon request byany investor of the Company or subsidiary companies and shall be kept for inspection by any investor at the registered office of the Company.
However, as directed by the Central Government, the financial data of the subsidiaries have been furnished under “Financial Statement of Subsidiary Companies” forming part of the annual report. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, consolidated financial statements presented by the Company include the financial information of its subsidiaries.
9. CORPORATE GOVERNANCEThe Company has complied with the corporate governance requirements, as stipulated under clause 49 of the listing agreement and the stipulated certificate of compliance is contained in this annual report.
Ratio Analysis
LIQUIDITY AND SOLVENCY RATIOS
Ratio 31.03.09 31.03.08 31.03.07
Current Ratio Current Assets/Current
Liabilities
54911/339761.61
30979/282571.09
38341/250151.53
Quick Ratio Current Assets –inventory/Current
Liabilities
45888/339761.35
20599/282570.72
31327/250151.25
Debt Equity Ratio
Debt /Equity
6989/934490.07
9002/841540.11
6308/685390.092
Fixed Asset Ratio Fixed Asset/Long
term funds
40708/1004380.40
32965/931560.35
26597/748470.355
Shareholders Equity Ratio
Shareholders equity/ Total Assets
93449/1019890.91
84154/948570.88
68539/765220.89
Interest Coverage Ratio
EBIT/Interest
17268/51034
25626/59642.9
23174/37661.6
INTERPRETATION OF RATIOS
LIQUIDITY RATIOS
1. CURRENT RATIO
This ratio measures the solvency of the company in the short term. Current assets are those assets which can be converted into cash within a year. Current liabilities are those liabilities which can be paid off within a year. This ratio measures the short term solvency of the firm. It states the number of times a company's CL are covered by its CA. The satisfactory Current Ratio is 2:1.
2009: 1.61
2008: 1.09
In the current year the firm has better ability to meet its current obligation than its previous year 2008.
2006-07
2007-08
2008-09
0 0.5 1 1.5 2
Current ratio
Current ratio
2. QUICK RATIO
It is the ratio that Is used to Measure Company’s ability to meet its current obligations. A quick ratio of 1:1 indicates highly solvent position. This ratio serves as a supplement to current ratio in analysing liquidity.
2009: 1.35
2008: 0.72
The liquid ratio is not so good in the year 2008. but it becomes more than 1 in the year 2009 which shows that they will pay their short term debts easily. This implies that bank is acquiring more assets which make it solvent for a particular year.
2006-07
2007-08
2008-09
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6
Quick Ratio
Quick Ratio
3. DEBT-EQUITY RATIO
This indicates the relationship between net worth of the company and loan funds. A debt equity ratio of 2:1 is accepted by financial institutions for financing projects.
2009: 0.07
2008: 0.11
From 2008 to 2009 the company’s debt equity ratio is decreasing. This shows that the company is becoming low geared.
2006-07
2007-08
2008-09
0 0.05 0.1 0.15
Debt Equity ratio
Debt Equity ra-tio
4. FIXED ASSET RATIO
This ratio indicates the amount of long term funds deployed in fixed assets. Fixed assets represent the net assets. Long term funds include share capital, reserves and surplus and long term loans.
2009: 0.40
2008: 0.35
In 2009 the ratio is higher so it shows that funds will be safer at the time of liquidation.
2006-07
2007-08
2008-09
0.3 0.35 0.4 0.45
Fixed Asset Ratio
Fixed Asset Ra-tio
5. SHAREHOLDERS EQUITY RATIO
This ratio shows the relationship between shareholders funds and total assets. This ratio indicates the degree to which unsecured creditors are protected against loss in the event of liquidation.
2009: 0.91
2008: 0.88
In 2009 as the ratio is more it shows that as there is larger proportion of equity, financial position of firm is stronger.
2006-07
2007-08
2008-09
0.86 0.88 0.9 0.92
Shareholders Equity Ratio
Shareholders Equity Ratio
6. INTEREST COVERAGE RATIO
The interest coverage ratio shows how many times interest charged is covered by funds that are available for payment of interest. It shows how many times company can cover its current interest payments out of current profits.
2009: 34
2008: 42.9
Since the ratio has fallen in 2009 from 2008 it shows there has been excessive use of debt.
2006-07
2007-08
2008-09
0 10 20 30 40 50 60 70
Interest Coverage Ratio
Interest Cov-erage Ratio
TURNOVER RATIOS
Ratio 31.03.09 31.03.08 31.03.07
203583/407085.01
178603/329655.41
Fixed Asset Turnover
Ratios
Sales/Net block 145922/26597
5.48Working Capital
Turnover Ratios
Net sales/Working
capital203583/20935
9.72178603/2722
65.6
145922/13326
10.95
Debtors Turnover ratio
Net credit sales/Average
Accounts Receivable
203583/787225.8
178603/7014.5
25.46
145922/7474*19.52
Debt Collection
Period 365/DTR365/25.8
14.14365/25.46
14.33
365/19.5218.69
Inventory Turnover Ratio
**COGS/Average stock 30.46 22.93 28.76
Total Assets Turnover Ratio
Sales/Total Assets
203583/1019891.99
178603/948571.88
145922/76522
1.90
*Since we have not been given values for the year ending 31-03-06 we have taken average debtors from the balance sheet as debtors as on 31-03-07.
Cogs calculated as peer schedule 18.
INTERPRETATION OF RATIOS
TURNOVER RATIOS
1. FIXED ASSET TURNOVER RATIO
The fixed asset turnover ratio is calculated to analyse whether the investment in fixed asset is justified in relation to the sales achieved.
2009: 5.01
2008: 5.41
The company’s fixed asset turnover ratio has fallen from the previous year which shows that in the previous year the utilization of fixed asset was better.
2006-07
2007-08
2008-09
4.7 4.9 5.1 5.3 5.5
Fixed Asset Turnover ra-tio
Fixed Asset Turnover ratio
2. WORKING CAPITAL TURNOVER RATIO
The Working capital turnover ratio is used to indicate the number of times a unit invested in working capital produces sales. Higher the ratio, the better it is This ratio indicates the extent of working capital turned over in achieving sales of the firm.
2009: 9.72
2008:65.6
It has decreased majorly from 65.6 in 2008 to 9.72 in 2009. This shows that working capital has been efficiently used in making sales.
2006-07
2007-08
2008-09
0 20 40 60
Working Capital Turnover ratio
Working Capi-tal Turnover ra-tio
3. DEBTORS TURNOVER RATIO
Debtors turnover measures whether the amount of resources tied up debtors is reasonable and whether the company has been reasonable in converting debtors into cash.
2009: 25.8
2008: 25.46
The ratio has increased in 2009 from 25.67 of 2008 to 26.33. this shows that higher the ratio better the position.
2006-07
2007-08
2008-09
0 5 10 15 20 25 30
Debtors Turnover ratio
Debtors Turnover ratio
4. DEBT COLLECTION PERIOD
This calculates how long it takes to collect amount from debtors. This actual collection period can be compared with the stated credit terms of the company. If it is longer than those terms, it indicates inefficiency in collecting debts.
2009: 14.14
2008:14.33
The debt collection period has fallen a bit since the previous year. This indicates that in 2008 there was more efficiency in collecting debts than in 2009.
5. INVENTORY TURNOVER RATIO
The level of inventory in a firm may be assessed by the use of this ratio which measures how much has been tied up in this ratio. This shows whether investment in stock has been fruitful or not.
2009: 30.46
2008: 22.93
The company’s ratio has increased since the previous year which enables the firm to earn a reasonable margin of profit.
6. TOTAL ASSETS TURNOVER RATIO
This indicates the number of times total assets are being turned over in a year.
2009: 1.99
2008: 1.88
If the ratio is higher it indicates overtrading of total assets, while a low ratio indicates idle capacity.
2006-07
2007-08
2008-09
1.8 1.85 1.9 1.95 2
Total assets turnover ratio
Total assets turnover ratio
PROFITABILITY RATIOS
Ratio 31.03.09 31.03.08 31.03.07
Gross Margin(%) Sales-COGS / Sales
203583-161768/203583
20.53
178603-141056/178603
21.02
16.66
Net Profit Margin(%) PAT/Sales
12187/2035835.98
17308/1786039.6
15620/145922
10.7
Operating Profit Margin(%)
Operating Profit(PBT+DEP+INT)/Sale
s24333/203583
11.931308/178603
17.5
25888/145922
17.7
Return On capital employed Profit after tax/Net worth
12187/10324111.8
17308/9566618.09
15620/7484720.86
INTERPRETATION OF RATIOS
PROFITABILITY RATIOS
1. GROSS PROFIT MARGIN
This ratio measures the gross profit margin on the total net sales made by the company. It represents the excess of sales proceeds during the year under observation over their cost, before taking into account administration, selling and distribution cost. It measures the efficiency of the firm’s operations.
2009: 20.53
2008: 21.02
There has been a variation in gross profit ratio. It indicates the efficiency with which products are produced.
2006-07
2007-08
2008-09
0 5 10 15 20 25
GROSS PROFIT RATIO
GROSS PROFIT RATIO
2. NET PROFIT MARGIN
This ratio is designed to focus attention on the net profit margin arising from business operations before interest and tax is deducted. This ratio measures the efficiency of operations of the company.
2009: 5.98
2008: 9.6
Since it has decreased in 2009 from the previous year it Indicates management’s fall in efficiency in manufacturing, administrating and selling a product.
2006-07
2007-08
2008-09
0 2 4 6 8 10 12
Net profit margin(%)
Net profit margin(%)
3. OPERATING PROFIT MARGIN
A high ratio indicates efficiency of company to generate operating profits out of sales.
2009: 9.18
2008: 11.9
Operating profit has decreased since last year which is not good for the firm.
2006-07
2007-08
2008-09
0 4 8 12 16 20
OPERATING PROFIT RATIO
OPERATING PROFIT RATIO
4. RETURN ON CAPITAL EMPLOYED
It is also called as return on investment. Strategic aim of business is to earn a return on capital. If return is not satisfactory, the deficiency should be corrected or the activity be abandoned.
2006-07
2007-08
2008-09
0 5 10 15 20 25
RETURN ON CAPITAL EMPOYED
RETURN ON CAPITAL EMPOYED
2009: 11.8
2008: 18.09
It helps in assessment of profitability of each proposal. It indicates how effectively operating assets are used in earning returns.
MARKET BASED RATIOS
Ratio Formula 31 – 03-09 31 – 03-08 31-03-07
Earning Per Share(EPS)*
Earnings available /No of shares 42.18 59.89 54.07
Dividend PerShare(DPS) Dividend Paid/No of
Shares 3.5 5 4.5
Pay out Ratio DPS/EPS 0.12 0.083 .09
*EPS and DPS is taken as per the annual reports of the company.
INTERPRETATION OF RATIOS
1. EARNING PER SHARE
The Earning per Share measures the overall profitability in terms of per equity share of capital contributed.
2009: 42.18
2008: 59.89
The earning per share has fallen since last year from 59.89 to 42.18. This shows that the investment in shares in future might be lesser.
2006-07
2007-08
2008-09
0 10 20 30 40 50 60 70
Earning Per Share
Earning Per Share
2. DIVIDEND PER SHARE
Dividend per Share indicates the extent to which some part of EPS is distributed to share holders and some is retained.
2009: 3.5
2008: 5
This shows that dividend per share has fallen since previous year. It indicates that more amount of profits have been retained in the business as less is being paid in the form of dividends.
2006-07
2007-08
2008-09
0 1 2 3 4 5 6
Dividend per share
Dividend per share
3. PAYOUT RATIO
Dividend payout ratio indicates the extent of the net profits distributed to the shareholders as dividend.
2009: 0.12
2008: 0.083
The dividend payout ratio has increased since last year. This shows that more amount of net profit has been given as dividend since last year.
2006-07
2007-08
2008-09
0 0.05 0.1 0.15
Dividend Payout Ra-tio
Dividend Payout Ratio
Comparative Balance Sheet and Profit and loss account
COMPARATIVE BALANCE SHEET for year ending 2007 and 2008
SOURCES OF FUNDS SCHEDULE As on 31.03.08 As on 31.03.07
Absolute Difference
Percentage Difference
SHAREHOLDERS FUNDS
Capital 1 1445 1445 0 0
Reserves and surplus 2 82709 67094 15615 23.27%
Total 84154 68539 15615 22.78%
LOAN FUNDS
Secured Loans 3 1 635 -634 99.84%
Unsecured Loans 4 9001 5673 3328 58.66%
Total 9002 6308 2694 42.70%
DEFERRED TAX
Deferred tax liabilities 2697 2776 -79 -2.84%
Deferred tax assets (996) (1101) -105 -9.53%
Total 1701 1675 26 1.55%
TOTAL 94857 76522 18335 23.96%
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 72853 61468 11385 18.52%
Less: Depreciation (39888) (34871) 5017 143.87%
Total 32965 26597 6368 23.94%
Capital work in Progress
6 7363 2507 4856 193.69%
TOTAL 40328 29104 11224 38.56%
INVESTMENT 7 51807 34092 17715 51.96%
CURRENT ASSETS,LOANS & ADVANCES
Inventory 8 10380 7014 3366 47.99%
Sundry Debtors 9 6555 7474 -919 12.29%
Cash & Bank Balance 10 3305 14228 -10923 76.77%
Other current Assets 11 331 384 -53 -13.80%
Loans & Advances 12 10408 9241 1167 12.62%
Total 30979 38341 -7362 19.20%
LESS CURRENT LIABILITIES & PROVISION
Current liabilities 13 24562 20110
Provisions 14 3695 4905 -400 8.15%
Total 28257 25015 3242 12.96%
Net Current Assets 2722 13326 -10604 79.57%
TOTAL 94875 76522 18353 23.98%
COMPARATIVE BALANCE SHEET FOR YEAR ENDING 2008 AND 2009
SCHEDULE As on 31.03.09
As on 31.03.08
Absolute Difference
Percentage Difference
SOURCES OF FUNDS
SHAREHOLDERS FUNDS
Capital 1 1445 1445 0 0
Reserves and surplus 2 92004 82709 9295 11.24%
Total 93449 84154 9295 11.045%
LOAN FUNDS
Secured Loans 3 1 1 0 0
Unsecured Loans 4 6988 9001 -2013 -22.36%
Total 6989 9002 -2013 -22.36%
DEFERRED TAX
Deferred tax liabilities
2340 2697 -357 -13.23%
Deferred tax assets (789) (996) 207 -20.78%
Total 1551 1701 -150 -8.81%
TOTAL 101989 94857 7132 7.51%
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 87206 72853 14353 19.70%
Less: Depreciation (46498) (39888) -6610 16.57%
Total 40708 32965 7743 23.48%
Capital work in Progress
6 8613 7363 1250 16.97%
TOTAL 49321 40328 8993 22.29%
INVESTMENT 7 31733 51807 -20074 38.74%
CURRENT ASSETS,LOANS & ADVANCES
Inventory 8 9023 10380 -1357 -13.07%
Sundry Debtors 9 9189 6555 2634 40.18%
Cash & Bank Balance 10 19390 3305 16085 486.68%
Other current Assets 11 981 331 650 196.37%
Loans & Advances 12 16328 10408 5920 56.87%
Total 54911 30979 23932 77.2%
LESS CURRENT LIABILITIES & PROVISION
Current liabilities 13 30169 24562 5607 22.8%
Provisions 14 3807 3695 112 3.03%
Total 33976 28257 5719 20.23%
Net Current Assets 20935 2722 18213 669.10%
TOTAL 101989 94875 7114 7.5%
INTERPRETATION
COMPARATIVE BALANCE SHEET ANALYSIS
1. Shareholder’s funds have increased by 11.045% as reserves and surplus have increased by 11.24% but no change occurs in share capital.
2. Secured loans have not changed and unsecured loans have decreased by 22.36% but deferred tax liability has decreased by 13.23%.
3. Fixed assets have increased by 22.29% which shows that productivity has declined.
4. Investments have decreased by 38.74%.
5. Sundry debtors have increased by 40.18%, inventories have decreased by 13.07%,cash and bank balance have increased by 486.68% and loans and advances have increased by 56.87% but current liabilities have increased by 22.8% and provisions have increased by 3.03%,as a result, net current assets have increased by 669.10%.
COMPARATIVE PROFIT & LOSS ACCOUNT for year ending 2007 and 2008
SCHEDULE As on 31.03.08
As on 31.03.07
Absolute Difference
Percentage Difference
INCOME
Gross Sales 15 209493 171442 38051 22.19%
Less Excise Duty 30890 25520 5370 21.04%
Net Sales 178603 145922 32681 22.40%
Income from Services 759 617 142 23.01%
Other Income 16 8371 5984 2387 39.89%
Total 187733 152523 35210 23.09%
EXPENDITURE
Consumption of raw materials and components
130342 101374 28968 28.58%
Purchases or traded goods 7771 6159 1612 26.17%
Consumption or stores 1470 1097 373 34.00%
Employee Remuneration 17 3562 2884 678 23.51%
Selling and Distribution expenses
19 5602 4999 603 12.06%
Total 159540 124771 34769 27.87%
less vehicles for own use
add Increase/decrease in work in progress
198 143 55 38.46%
Finished goods and spare parts
21 -2917 2007 -4924 -245.34
Total 156425 126635 126635 23.52%
Earnings before Interest, Tax, Depreciation and Amortization
31308 25888 5420 20.94%
Interest 20 593 376 217 57.71%
Depreciation 5 5682 2714 2968 109.36%
Profit Before Tax 25030 22798 2232 9.79%
less cash expenses-current tax
7509 6089 1420 23.32%
Deferred tax 26 67 -41 -61.19%
Fringe benefit tax 98 125 -27 -21.60%
Previous Years 89 125 -36 -28.80%
Profit After Tax 25030 22798 2232 9.79%
Add braught forward from previous year account
56373 43939 12434 28.30%
Profit available for appropriation
73681 59471 14210 23.89%
General reserve 1731 1562 169 10.82%
Proposed Dividend 1445 1300 145 11.15%
Corporate dividend tax 248 219 29 13.24%
Balances carried forward to balance sheet
70257 56373 13884 24.63%
Basic Diluted Earning per share in Rs
59.91 54.06 5.85 10.82%
COMPARATIVE PROFIT & LOSS ACCOUNT for year ending 2008 and
2009
SCHEDULE As on 31.03.09
As on 31.03.08
Absolute Difference
Percentage Difference
INCOME
Gross Sales 15 230852 209493 21359 10.20%
Less Excise Duty 27260 209493 -3621 -11.72%
Net Sales 203583 178603 24980 13.99%
EXPENDITURE
Consumption of raw materials and components
150598 130342 20256 15.54%
Purchases or traded goods 7256 7771 -515 -6.63%
Consumption or stores 1978 1470 508 34.56%
Employee Remuneration 17 4711 3562 1149 32.26%
Manufacturing,Administrative and other expenses
18 15685 10793 4892 45.33%
Selling and Distribution expenses
19 7382 5602 1780 31.77%
Total 187610 159540 28070 17.59%
Finished goods and spare parts
21 2818 2917 5735 -196.61
Earnings before Interest, Tax, Depreciation and Amortization
24333 31308 -6975 -22.28%
Interest 20 510 593 -83 -14.00%
Depreciation 5 7065 5682 1383 24.34%
Profit Before Tax 16758 25030 -8272 -33.05%
less cash expenses-current tax 4592 7509 -2917 -38.85%
Deferred tax -118 26 -144 -553.85%
Fringe benefit tax 97 98 -1 -1.02%
Previous Years 0 89 -89 -100.00%
Profit After Tax 12187 17308 -5121 -29.59%
Add braught forward from previous year account
70257 56373 13884 24.63%
Profit available for appropriation
82444 73681 8763 11.89%
Proposed Dividend 1011 1445 -434 -30.03%
Corporate dividend tax 172 248 -76 -30.65%
Balances carried forward to balance sheet
80042 70257 9785 12.29%
Basic Diluted Earning per share in Rs
10 42.18 59.91 -17.73 -29.59%
INTERPRETATION
A comparative income statement shows the operating results for a number of
accounting periods so that changes in data in terms of money and percentage from
one period to another may be known.
Comparative income statement is prepared with the objective to analyse the income
and expenditure for two or more years. And to review the business operations of the
last year and its likely effect on the current years operations.
Now having a look at the comparative income statement of the company for the year
2008 -2009 we note that the gross sales of the company increased by Rs 21359
which accounted for a rise by 10.20%. A decrease in the value of excise duty was
observed for 2008 to 2009 which accounted for 11.72%. this caused net sales to
increase to Rs 203583 ie 13.99% increase. The income from services recorded an
increase of Rs 211 in absolute terms whereas it was 27.80% in percentage terms.
Other incomes also rose by 19.28%.
Thus the overall change in incomes was found to be 14.28%.
Coming up to the expenditure side it was seen that the consumption of raw materials
and components rose by Rs 20256 which was a 15.54% increase. Whereas the
purchases fell by 6.63% from year 2008 to 2009.
Employee remuneration saw an increase by Rs 1149 which might have been
because of promotions or employment of more no of people at work. Manufacturing,
administrative and other expenses also rose by 45.33% which certainly shows that
the scale of operations might have increased. Other expenses like selling and
distribution also saw a rise of Rs 1780.
After taking into consideration the vehicles for own use, work in progress, finished
goods and spare parts the earnings before interests, taxes and depreciation came
out to be24333 for the year 2009 which was a 22.28% decrease from Rs 31308 in
2008.
Finally the profit after tax for the company was also seen to fall to Rs 12187 maybe
because of high tax rates imposed. The profit available for appropriation was found
to be Rs 82444. Both the general reserve and proposed dividend experienced a fall
29.58% and 30.03% respectively. And the basic diluted earnings per share was
recorded as Rs 42.18 which was a 29.59% decrease from the year 2008.
Common size Balance sheet and Profit and
loss
COMMON SIZE BALANCE SHEET FOR YEAR ENDING 2007 AND 2008
SCHEDULE As on 31.03.08 As on 31.03.07
Percentage OF
Total
Percentage OF
Total
SOURCES OF FUNDS As on 31.03.08 As on 31.03.07
SHAREHOLDERS FUNDS
Capital 1 1445 1445 1.52% 1.89%
Reserves and surplus 2 82709 67094 87.19% 87.68%
Total 84154 68539 88.71% 89.56%
LOAN FUNDS
Secured Loans 3 1 635 0.00% 0.83%
Unsecured Loans 4 9001 5673 9.49% 7.41%
Total 9002 6308 9.49% 8.24%
DEFERRED TAX
Deferred tax liabilities 2697 2776 2.84% 3.64%
Deferred tax assets (996) (1101) (1.05)% (1.44)%
Total 1701 1675 1.79% 2.2%
TOTAL 94857 76522 100% 100%
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 72853 61468 76.80% 80.33%
Less: Depreciation (39888) (34871) (42.05)% (45.57%)
Total 32965 26597 34.75 34.76%
Capital work in Progress
6 7363 2507 7.76% 3.28%
TOTAL 40328 29104 42.51% 38.03%
INVESTMENT 7 51807 34092 54.62% 44.55%
CURRENT ASSETS,LOANS & ADVANCES
Inventory 8 10380 7014 10.94% 9.17%
Sundry Debtors 9 6555 7474 6.91% 9.77%
Cash & Bank Balance 10 3305 14228 3.48% 18.59%
Other current Assets 11 331 384 0.35% 0.50%
Loans & Advances 12 10408 9241 10.97% 12.08%
Total 30979 38341 32.65% 50.10%
LESS CURRENT LIABILITIES & PROVISION
Current liabilities 13 24562 20110 25.89% 26.28%
Provisions 14 3695 4905 3.90% 6.41%
Total 28257 25015
Net Current Assets 2722 13326 2.87% 17.41%
TOTAL 94875 76522 100.00% 100.00%
COMMON SIZE BALANCE SHEET AS ON 2008 AND 2009
SCHEDULE As on 31.03.09 As on 31.03.08
Percentage of Total
Percentage of Total
SOURCES OF FUNDS As on 31.03.09 As on 31.03.08
SHAREHOLDERS FUNDS
Capital 1 1445 1445 1.42% 1.52%
Reserves and surplus 2 92004 82709 90.21% 87.19%
Total 93449 84154 91.62% 88.71%
LOAN FUNDS
Secured Loans 3 1 1 0.00% 0.00%
Unsecured Loans 4 6988 9001 6.85% 9.49%
Total 6989 9002 6.85% 9.49%
DEFERRED TAX
Deferred tax liabilities
2340 2697 2.29% 2.84%
Deferred tax assets (789) (996) (0.77)% (1.05)%
Total 1551 1701 1.52% 1.79%
TOTAL 101989 94857 100% 100%
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 87206 72853 85.51% 76.80%
Less: Depreciation (46498) (39888) (45.59)% (42.05)%
Total 40708 32965 39.92% 34.75%
Capital work in Progress
6 8613 7363 8.45% 7.76%
TOTAL 49321 40328 48.35% 42.51%
INVESTMENT 7 31733 51807 31.11% 54.62%
CURRENT ASSETS,LOANS & ADVANCES
Inventory 8 9023 10380 8.85% 10.94%
Sundry Debtors 9 9189 6555 9.01% 6.91%
Cash & Bank Balance 10 19390 3305 19.01% 3.48%
Other current Assets 11 981 331 0.96% 0.35%
Loans & Advances 12 16328 10408 16.01% 10.97%
Total 54911 30979 53.84% 32.65%
LESS CURRENT LIABILITIES & PROVISION
Current liabilities 13 30169 24562 29.58% 25.89%
Provisions 14 3807 3695 3.73% 3.90%
Total 33976 28257 33.31% 29.78%
Net Current Assets 20935 2722 20.53% 2.87%
TOTAL 101989 94875 100.00% 100.00%
INTERPRETATION
COMMON SIZE BALANCE SHEET ANALYSIS
Current assets as a percentage of total assets have increased to 53.84% in 2009 as
compared to 32.65% in 2008.Net current assets in 2009 were only 20.53% ,which were
2.87% in 2008.This increase was shared by cash and debtors while inventories showed a
decrease implying the sales were high, even though the current liabilities rose. The value of
net assets has risen substantially indicating a high liquidity. The total long term debt has
fallen by 2.64% which shows the repayment. Reserves have shown an increase in the
current year.
COMMON SIZE PROFIT & LOSS ACCOUNT for year ending 2007 and 2008
SCHEDULE As on 31.03.09
As on 31.03.08
Common Size on 31.03.08
Common Size on 31.03.07
INCOME
Gross Sales 15 230852 209493 117.30% 117.49%
Less Excise Duty 27260 209493 17.30% 17.49%
Net Sales 203583 178603 100.00% 100.00%
Income from Services 970 759 0.42% 0.42%
Other Income 16 9985 8371 4.69% 4.10%
Total 214538 187733 105.11% 104.52%
EXPENDITURE
Consumption of raw materials and components
150598 130342 72.98% 69.47%
Purchases or traded goods 7256 7771 4.35% 4.22%
Consumption or stores 1978 1470 0.82% 0.75%
Employee Remuneration 17 4711 3562 1.99% 1.98%
Manufacturing,Administrative and other expenses
18 15685 10793 6.04% 5.66%
Selling and Distribution expenses
19 7382 5602 3.14% 3.43%
Total 187610 159540 89.33% 85.51%
less vehicles for own use
add Increase/decrease in work in progress
223 198 0.11% 0.10%
Finished goods and spare parts
21 2818 2917 -1.63% 1.38%
Earnings before Interest, Tax, Depreciation and Amortization
24333 31308 17.53% 17.74%
Interest 20 510 593 0.33% 0.26%
Depreciation 5 7065 5682 3.18% 1.86%
Profit Before Tax 16758 25030 14.01% 15.62%
less cash expenses-current tax 4592 7509 4.20% 4.17%
Deferred tax -118 26 0.01% 0.05%
Fringe benefit tax 97 98 0.05% 0.09%
Previous Years 0 89 0.05% 0.09%
Profit After Tax 12187 17308 9.69% 10.70%
Add braught forward from previous year account
70257 56373 31.56% 30.11%
Profit available for appropriation
82444 73681 41.25% 40.76%
General Reserve 1219 1731 0.97% 1.07%
Proposed Dividend 1011 1445 0.81% 0.89%
Corporate dividend tax 172 248 0.14% 0.15%
Balances carried forward to balance sheet
80042 70257 39.34% 38.63%
Basic Diluted Earning per share in Rs
10 42.18 59.91 0.03% 0.04%
COMMON SIZE PROFIT & LOSS ACCOUNT for year ending 2008 and 2009
SCHEDULE As on 31.03.09
As on 31.03.08
Common Size on 31.03.09
Common Size on 31.03.08
INCOME
Gross Sales 15 230852 209493 113.39% 117.30%
Less Excise Duty 27260 209493 13.39% 17.30%
Net Sales 203583 178603 100.00% 100.00%
Income from Services 970 759 0.48% 0.42%
Other Income 16 9985 8371 4.90% 4.69%
Total 214538 187733 105.38% 105.11%
EXPENDITURE
Consumption of raw materials and components
150598 130342 73.97% 72.98%
Purchases or traded goods 7256 7771 3.56% 4.35%
Consumption or stores 1978 1470 0.97% 0.82%
Employee Remuneration 17 4711 3562 2.31% 1.99%
Manufacturing,Administrative and other expenses
18 15685 10793 7.70% 6.04%
Selling and Distribution expenses
19 7382 5602 3.63% 3.14%
Total 187610 159540 92.15% 89.33%
less vehicles for own use
add Increase/decrease in work in progress
223 198 0.11% 0.11%
Finished goods and spare parts 21 2818 2917 1.38% -1.63%
Total 190205 156425 99.43% 87.58%
Earnings before Interest, Tax, Depreciation and Amortization
24333 31308 11.95% 17.53%
Interest 20 510 593 0.25% 0.33%
Depreciation 5 7065 5682 3.47% 3.18%
Profit Before Tax 16758 25030 8.23% 14.01%
less cash expenses-current tax 4592 7509 2.26% 4.20%
Deferred tax -118 26 -0.06% 0.01%
Fringe benefit tax 97 98 0.05% 0.05%
Previous Years 0 89 0.00% 0.05%
Profit After Tax 12187 17308 5.99% 9.69%
Add braught forward from previous year account
70257 56373 34.51% 31.56%
Profit available for appropriation
82444 73681 40.50% 41.25%
General Reserve 1219 1731 0.60% 0.97%
Proposed Dividend 1011 1445 0.50% 0.81%
Corporate dividend tax 172 248 0.08% 0.14%
Balances carried forward to balance sheet
80042 70257 39.32% 39.34%
Basic Diluted Earning per share in Rs
10 42.18 59.91 0.02% 0.03%
INTERPRETATION
An income statement in which each account is expressed as a percentage
of the value of sales. This type of financial statement can be used to allow for easy
analysis between companies or between time periods of a company.
Common size income statement analysis allows an analyst to determine how the
various components of the income statement affect a company's profit.
Now the income statement of the company shows that the gross sales have
increased by 113.39% from year 2008 to 2009. As far as the excise duty is
concerned it was Rs 27260 in 2009 which was comparatively less than Rs 30890 in
2008. Thus the observed figure for net sales in 2009 was Rs 203583. The income
from services saw a gradual increase from 0.42%
to 0.48% over the whole financial year. Other incomes also rose by around 4.90%
which in absolute terms was close to Rs 9985.
Coming up to expenditures column it is seen that the consumption of raw materials
and components increased by 73.97%. Overall expenses increased b y 92.15%.at
this point after taking into consideration vehicles for own use, change in work in
progress, finished goods and spare parts etc the net expenditure changed from
16425 to 190205. The reason can be somewhat increase in the scale of operations
of the business firm.
Earnings before interests, taxes and depreciation was 24333 for year 2009 which
was comparatively lower than the increase from 2007 to 2008. Similarly the profit
after tax was a bit lower ie around Rs12187.
Finally by taking into account also the previous years profits, general reserve,
proposed dividend etc the overall figure for profits was lower than that of 2008 but
still was a favorable amount depicting a clear picture of the affairs of the company.
LIMITATIONS OF THE PROJECT
1. Time constraint- Due to shortage of time we were not able to put in more efforts in the analysis.
2. Not comparable: When results of two enterprises are being compared it should be kept in mind that same accounting policies are followed.
3. Effect of price level changes: No consideration is given to price level changes in the accounting variables which affects the comparability.
4. Personal bias: Different people calculate and interpret the financial statements differently. So it is not free from personal bias.
ANNEXURES
INDIVIDUAL CONTRIBUTION
FOR COMPLETING THE WHOLE ACCOUNTS PROJECT ALL GROUP MEMBERS HAVE CONTRIBUTED EQUALLY IN TERMS OF TIME AND
EFFORT. BUT TO MAKE IT SIMPLER AND CONVENIENT THE WHOLE WORK WAS BEING DIVIDED.
The details of company and the important points related to director’s statement were covered by MEETALI BANSAL.
Ratio analysis and compilation was done by RITIKA SURI
Comparative and common size balance sheet and their analysis were being prepared by NISHANT MENDIRATTA AND MEETALI BANSAL.
Comparative and common size income statements were prepared by
SAKSHI KALRA AND NAMAN POPLI.
. .