manda project1

A

PROJECT REPORT

ON

FINANCIAL ANALYSIS OF RATNAMANI TECHNO-CAST LTD

SUBMMITED FOR

PARTIAL FULFILLEMENT OF THE REQURMENT OF THE TWO YEAR FULL TIME MASTER OF BUSINESS ADMINISTRATION, (M.B.A)

SUBMMITED BY

MANDAKINI.P.PATEL

M.B.A.

ACADEMIC YEAR 2010-12

SUBMMITED TO

GUJARAT TECHNOLOGICAL UNIVERSITY, AHMEDABAD.

VJKM INSTITUTE OF MANAGEMENT& COMPUTER STUDIES,VADU.

Affiliated With Gujarat Technological University, Ahmedabad.

Ta-Kadi, Dist-Mehsana, Pin: 382705(North Gujarat).

VJKM Institute of management & computer studies vadu.

PREFACE

MBA. is a Two years Degree Course namely a degree in “master of

Business Administration”. Candidate from the degree of M.B.A. need to have passed the

graduation conducted by the examination of any university at examine body recognizes as

equivalent.

Now a day’s management has got a much wider scope among the many

other different fields. Gujarat state is an industrially developed state.

To fulfill this gap at practical knowledge university expects each

student to visit a unit where he or she spends some hours. In MBA. each student has to visit

any industry and study any one department at that industry.

Having full information and details at any one department the students

materialized them in a report, which is of his or her visit.

I am also among one of the luckiest student who get an opportunity. I

visited “Ratnamani Techno-cast ltd” at Chhatral’’ in this year. The result of my visit has

taken the shape of a report.


ACKOWLEDGEMENT

It would really difficult for me to complete the marketing research project

without getting co-operation of certain people. In other words there are so many external

thankful who directly or indirectly helped me in my marketing research project.

I as specially thankful to my director DR, B.S.Agrawal sir to give such kind of

opportunities to get practical knowledge about marketing research.

I would like to express my gratitude to Mr. Chanduji.P.Thakor. Our Head

of department who gave me a good opportunity to learn about industrial environment during

industrial visit. The task would have been difficult for me without guidance of our Professor.

Ms. Hetal Joshi

We are very thankful to the Manager of Ratnamani Techno-cast ltd. Mr.

Ashokbhai who gave me permission to do this Marketing research report in their organization

and helped me by giving all required information. I am also thankful to my friends who

helped me and guided me regarding the source of information related to particular industries.

In other words there are so many external thankful who directly or indirectly helped me in my

marketing research project.


EXECUTIVE SUMMARY

This is epitomized in Corporate Philosophy: "Excel in whatever you do" and

"Prosperity through performance”.

This report is based on industrial visit at RATNAMANI TECHNO CAST LTD,

Chhatral. Ratnamani Techno cast Ltd., now popularly known as "RATNAMANI", came into

existence in the year 1985. The genesis of RATNAMANI's birth and growth is:

ACCEPTING CHALLENGES. The planned growth has transformed two separate units-one

for welded ss pipes & tubes and the other for seamless SS pipes & tubes- into a multi-

product, multi-location public company. RATNAMANI has carved a niche as the preferred

single-point source for a wide range of casting products like valves and pumps.

RATNAMANI's Quality Management System conforms to ISO9001:2000, PED,

ADW2, EXPORT HOUSE, BOILER, API5L/2B. More over products undergo various

stringent inspection and testing stages, at the up-to- date in-house facilities, such as

Hydrostatic, tensile and various other Mechanical Tests, Non Destructive Tests, Chemical &

Corrosion Tests before they are released for the customers. This assures high value quality of

Products.

The prices are very competitive in the overseas markets as well and as a result

RATNAMANI is exporting its products to customers in U.S.A., Germany, France, Vietnam,

UAE, Kuwait, Switzerland, Netherlands, Malaysia, South Africa, Israel, UK, Indonesia,

South Korea, Belgium, Iran, Egypt, Australia.

The human resource base of RATNAMANI is dedicated and motivated team

employees, who are well qualified and trained to ensure quality and timely delivery to meet

the requirements of the Customers. RATNAMANI's goal is to reach sales turnover of Rs.

5000 million by 2006-07,by becoming a GLOBAL PLAYER who is committed to

satisfaction of stakeholders.


CONTENT

SR No. Particulars Page No.

PREFACE2

ACKNOWLEDGEMENT3

EXECUTIVE SUMMARY4

1 HISTORY OF METAL CASTING INDUSTRY8

2 INTRODUCTION ABOUT RTCL11

2.1 Name & Addresses 13

2.2 Board of Director15

2.3 Products17

2.4 Organization Chart20

2.5 Quality Assurance21

2.6 Quality Policy22

2.7 Manufacturing Process24

3 FINANCIAL DEPARTMENT26

3.1 Financial Goal of The Company28

3.2 Objectives of the financial Analysis29

3.3 Sources Of Information32

3.4 Techniques of Financial Statement Analysis34

3.5 Financial Statement35

3.6 Common Size Statement36

4 Trend Analysis42

5 Ratio Analysis46


6 Du Pont analysis65

7 Problems in Financial Statement Analysis68

8 Findings & Suggestion70

9 Limitations of the Analysis73

10 Conclusion 74

11 Bibliography75

12 Annexure 76


History of Metal Casting

The oldest preserved cast parts - weapons and cult objects made of copper -

originate from the Middle East and India. They date back to the period around 3.000 BC. It is

possible that metal casting technology, using moulds originated in the Middle East. However,

there are suggestions that this process may have been developed in India and China.

The melting ovens of the early Iron Age can partly be traced back to ceramic

burning ovens. The model and mould building was mastered very well from the beginning.

Lost moulds made of loam and clay, wax models, single piece-work as well as permanent

moulds made of stone and metal for the serial production of casting parts were already used.

The production of hollow spaces by using cores, has already been proved by the oldest

casting parts discovered.

First machines were developed for " line-o-type " printing using Lead alloys.

Die casting machines for engineered parts was developed in USA by Doehler. Patented in 1905.

First machines were hand operated, often using compressed air directly on the metal, lead or zinc.

Modern machines use hydraulics to develop high pressures (several thousand psi ) & very fast fill

times.


Cold chamber machines were developed for high melting point alloys Al, Mg, Brass,

Stainless steel & Uranium.

Shortly after the dark ages in Europe, the industrious sculptor and goldsmith began to make

use of the lost wax method of casting. He learned this process from the writings of the monk

Theophilus Presbyter (circa 1100) whose Schedula Divers arum Artium is the earliest known

foundry text. In Cellini's autobiography, considered to be one of the classics of literature, he

describes in great detail the casting of his famous Perseus and the Head of Medusa. This three

and a half ton statue was completed in 1554 and was unveiled at the Loggia dei Lanzi in

Florence, Italy, where it stands to this day.

During World War II, with urgent military demands overtaxing the machine

tool industry, the art of investment casting provided a shortcut for producing near net shape

precision parts and allowed the use of specialized alloys which could not be readily shaped

by alternative methods. The investment casting process was found practical for many

wartime needs--and during the postwar period it expanded into many commercial and

industrial applications where complex metal parts were needed. It was in this period that the

Hitchiner Manufacturing Company was founded at the Amoskeag Mill yards of Manchester,

NH.

The solid mold technique was first utilized because a technology to

successfully remove the wax patterns from a shell without causing it to collapse, crack or

burst had not yet been devised. In the solid mold technique, a wax was placed in a steel

casing and surrounded by a setting slurry. The drawbacks of the solid mold technique were

extremely long pre-heat, size limitations and poor dimensional tolerances.

The first successful shell technology was the Metal cast Process, which used

solidified mercury as a pattern material. Mercury patterns were very heavy but extremely


accurate. This was a very difficult process as all pattern production and shell building had to

be done at temperatures below minus 39 degrees Celsius--the melting temperature of

mercury! This process is no longer used due to high costs and the health hazards involved in

handling this toxic element.

Over 4,000 years ago, between the Tigrus and Euphrates Rivers in a land known as

Mesopotamia, ancient artisans produced idols and ornaments using natural beeswax for

patterns, clay for molds and manually operated bellows for stoking furnaces. Today,

precision components for spacecraft and jet engines are investment cast using the latest

advances in computer technology, robotics and counter gravity casting techniques


INTRODUCTION OF COMPANY

RATNAMANI TECHNO CASTS LTD. (RTCL) is born to a family of

reputed industrial pedigree – RATNAMANI Metal & Tubes Ltd. RTCL is the establish on

the year of the 2001. RTCL is one of the most reputed manufacturers of Stainless Steel Tubes

& Pipes and Carbon Steel Pipes.

RTCL manufactures Precision Investment Castings through “Lost Wax

Process”. RTCL is equipped with in-house facilities from Design and Manufacturing of Dies

/ Tools and Castings, all under one roof. We develop and manufacture castings of specified

quality level as per customer material specification, drawing, design and technical

requirements

The plant is geared to manufacture investment castings, from few grams to

60 Kgs. single piece weight in various grades Carbon Steel, Low Alloy Steel, High Alloy

Steel, Stainless Steel, Duplex Stainless Steel, Precipitation Hardening Steel; Nickel & Cobalt

base alloys etc

We cater to both indigenous and export requirements for various Industries /

OEM’s like Pumps & Valve manufacturers, Automotive, Defense, General Engineering,

Aerospace application, Textile, Pipe Fittings, Architectural & Decorative Fittings, Chemical

and Food Processing. We export our castings to countries like USA, U.K., Italy,

Switzerland, France, Norway etc. RATNAMANI has carved a niche as the preferred single-

point source for a wide range of casting Products.

RATNAMANI's Quality Management System conforms to ISO9001:2000,

PED, ADW2, EXPORT HOUSE, BOILER, API5L/2B. More over products undergo various

stringent inspection and testing stages, at the up-to- date in-house facilities, such as

Hydrostatic, tensile and various other Mechanical Tests, Non Destructive Tests, Chemical &

Corrosion Tests before they are released for the customers. This assures high value quality of

Products.


The human resource base of RATNAMANI is dedicated and motivated team

employees, who are well qualified and trained to ensure quality and timely delivery to meet

the requirements of the Customers.

RATNAMANI's goal is to reach sales turnover of Rs. 5000 million by 2006-07,by

becoming a GLOBAL PLAYER who is committed to satisfaction of stakeholders.

OUR VALUES:

Integrity: Honesty in every action.

Commitment: Deliver on the promise.

Passion: Energized action

Seamlessness: Boundary in letter and spirit

Speed: One step ahead always.


NAME OF ENTERPRISE: RATNAMANI TECHNO CAST LIMITED

Address:-

Sstp Division:-

Ratnamani Techno Cast Limited

Survey No: 769,

Ahmadabad – Mehsana Highway

Near Chhatral – 382729, Gujarat (India)

Phone - +91-2764-232254 / 232263 / 233763;

Sp Division:-

Plot No: 3306 To 3309

GIDC Estate,

Chhatral Phase IV

Ahmadabad – Mehsana Highway,

Chhatral – 382715, Gujarat (India)

Phone - +91-2764-232234 / 233919 / 232409;

Mumbai Office:-

No. 9 Lion House, Dr. Deshmukh Lale,

Nanubhai Desai Road,

Mumbai – 400 004 India

Phone: +91-22-2380 2591 / 2 / 3 / 4

Regd. & sales office:-

17, ramugat society,

Naranpura char Rasta,

Ahmadabad – 380013, Gujarat (India)


INFORMATION ABOUT COMPANY

Ratnamani Techno Cast limited. As the name it suggests that it is a private limited

company. It lies in large scale industry. It was incorporated under company act 1956. The

organization manufacturing department is located at chhatral GIDC Gujarat (India) and

registered office of company is situated at ramugat society, Naranpura char Rasta,

Ahmadabad – 380013, Gujarat (India).

The firm was established with the objective to carry on business as buyer, seller,

supplier, agent, exporter, importer, manufacturers, developer, distributor, in all kind and types

of pares material and articles including of metals and tubes.

The way of performance at Ratnamani is by struggle, trial & error and learning by

experience. They struggled initially to raise financial resources, but have now managed the

same by way of equity of director and share holder.

The firm manufactures flexible laminates product, which are totally machinery

made. They are produced according to the specification and requirement of customer thus

with the increase in volume of business. It because necessary for the company to perform

marketing externally.


BOARD OF DIRECTORS:

Our Directors are experts in the diversified fields of engineering, human

resource development, business strategy, finance and economics. They review all information

relating to significant business decisions, including strategic and regulatory matters. Every

member of the board, including the non-executive directors, has full access to any

information related to the company.

Mr. Prakash Sanghvi – (Chairman Managing Director)

Mr. Prakash Sanghvi has vast business experience in the metal industry. He leads the

core team that is driving the company's growth and transformation from a company

predominantly selling Tubes & Pipes to achieving its vision of becoming a

technology-led global engineering company.

Mr. Sanghvi has played a vital role in the company's evolution. He has been the

architect of the company's projects and expansion strategy. He has helped create new

platforms of growth for Ratnamani – increasing shareholder and societal value while

decreasing the company's environmental footprint.

Mr. Jayanti Sanghvi – (Whole Time Director)

Mr. Jayanti Sanghvi is one of the key members of the core team responsible for

creation and setting up of Development Centre, Resources, Staffing & Training,

Facilities & Infrastructure Management and Administration.

Mr. Jayanti Sanghvi is constantly focused on process improvements for enhancing

productivity


Mr. Shanti Sanghvi – (Whole Time Director)

Mr. Shanti Sanghvi is a thought leader on marketing strategy and customer related

issues in India, helping organization develop marketing strategies. He is stationed at

Mumbai handling marketing activities.

Mr. D C Anjaria – (Director)

Mr. Anjaria is an independent professional Director on the Board of the company

having stupendous experience in the field of international finance and corporate

finance. Mr. Anjaria is an IIM – MBA, and has worked with Citibank and UTI.

Dr. Vinodkumar Agrawal – (Additional Director)

He is an independent non-Executive Director on the Board of the Company.

.

Bankers

Dena Bank

Punjab National Bank

State Bank of India

IDBI Bank Limited

Auditor

M/S Mehta Lodha & Co.

(Chartered accountants)

PRODUCTS:


Production / operation management is the process, which combine and transforms various

resources used in production / operation subsystem of the organization into value added

product / services in a controlled manner as per the policies of the organization.

Maximum Linear Dimension up to 450 MM Maximum weight up to 60 Kgs


Application:

Pumps & Valves Components

Automotive Parts

Defense

General Engineering

Aerospace

Textile Machinery

Chemical and Food Processing

Pipe fittings

Architecture & Decorative Fittings

Standard Normal Tolerances

Normal linear +0.10mm to +/25mm for . +/- 0.10 mm for each addition of

25 mm thereafter Premium tolerances require additional operations. We can achieve very

close tolerances on functionally important dimensions. The tolerance achieved will depend on

the alloy and configuration of the castings. The same can be determined in consultation with

our Engineering Wing.

RTCL manufactures Precision Investment Castings through “Lost Wax

Process”. RTCL is equipped with in-house facilities from Design and Manufacturing of

Dies / Tools and Castings, all under one roof. We develop and manufacture castings of

specified quality level as per customer material specification, drawing, design and technical

requirements

The plant is geared to manufacture investment castings, from few grams

to 60 Kgs. single piece weight in various grades Carbon Steel, Low Alloy Steel, High Alloy

Steel, Stainless Steel, Duplex Stainless Steel, Precipitation Hardening Steel; Nickel & Cobalt

base alloys etc.


We cater to both indigenous and export requirements for various

Industries / OEM’s like Pumps & Valve manufacturers, Automotive, Defense, General

Engineering, Aerospace application, Textile, Pipe Fittings, Architectural & Decorative

Fittings, Chemical and Food Processing.

We export our castings to countries like USA, U.K., Italy, Switzerland, France, Norway etc.

ORGANISATION CHART


M a n a g i n g d i r e c t o r

Production manager Accountant

clerk

Assistant manager

Supervisor

Packing supervisor

Worker

QUALITY ASSUARANCE


Our goal is to not only to develop, manufacture and deliver castings of specified quality but

also timely delivery of the castings. Our Quality Management System is accredited to ISO

9001:2000, ADW 0 and PED under RWTUV.

Chemical Analysis:

“BAIRD” make Direct Reading Multi Matrix Spark Emission Spectrometer for instant

analysis of metal composition and melt control back up with complete facilities for Wet

Analysis Testing for Ferrous & Non Ferrous base alloys.

Mechanical Testing:

Universal Testing Machine, Brinell / Brinell & Rockwell Hardness Testers to measure

mechanical properties of castings viz. hardness, tensile strength, yield strength, elongation,

impact test, bend test.

Metallographic Examination: Biotech“Microscope for micro-structure analysis

Intergranular Corrosion Tests : As per ASTM A262 practice A, B, C, E

Measuring Instruments: Micrometers, Height Gauges, Digital Verniers, Surface roughness

measurement gauge.

Non Destructive Testing: Magnetic Particle Inspection, Dye Penetrant Examination,

Ultrasonic Testing and Radiography facility

CORPORATE AFFAIRS


Ratnamani’s corporate office is strategically housed in its own modern building at

Ahmedabad, commercial capital of Gujarat which is one of the most industrialized states of

India.

Spread over an area of 655 square meter and has an Infrastructure for 60 Professionals

Training rooms and conferencing facilities

Canteen Facilities

Internet - 512 KBPS

Inter Unit Connectivity through RFID

15 voice lines

The corporate development, finance & accounting, marketing, purchase,

administration and company affairs functions operate from the corporate office

Quality Policy

Ratnamani aims to consistency supply product to the satisfaction of customer though

continuous improvement in methods, practices, systems and department of human resource.

Awarded

ISO 9001 : 2000 under LRQA.

Recognition as Export House – Issued by Government of India.

AD 2000 – merkblatt W 0 Certification Under RWTUV

Pressure Equipment Directive [PED] under LRQA.

“Well Known Pipe / Tube Maker” – Indian Boiler Regulations, 1950

License for API 5L and API 2B Monogram.


Manufacturing Process

Wax Section

Equipped with modern & semi automatic hydraulic system Wax Injection machines to

handleproductionofhighvolumewax.

Wax Pattern / Assembly shop is fully air-conditioned for controlled environment

Ceramic Molding

Centrally air-conditioned and humidity controlled shell room equipped with set of slurry

investment drums, sand faller machines to stucco the Wax Assemblies, the de-waxing system

and trays for reclaiming the melted wax.

Melting Section

Temperature controlled oil-fired shell / moulds firing & pre-heating furnaces; most

sophisticated High Frequency Induction Melting Furnaces having capacity of 200 kgs, 150

kgs, 100 kgs and 50 kgs. These different size crucible furnaces enable us to cater the castings

for high alloy, cobalt and nickel based alloys.


Heat Treatment

To undertake Annealing, Normalizing, Stress reliving, Hardening, tempering etc. for all types

of metals & Alloys. Heat Treatment furnaces calibrated as per API 6A having maximum

attainable Temperature up to 1200oC and are Equipped with time-temp. cycle recorder.

Fettling:- Specially designed Knock Out and Cut-off Equipments are used to clean and cut

castings from the tree. Grinding equipments are provided for accurate stock removal of

casting in-gates and pneumatic tools for finishing.

Reason for selecting the location:

For reducing the transportation cost of material.

Available of raw material, goods, water, electricity & road facility.

The mission of the unit:

To earn more foreign exchange.

To reduced the transportation cost of material receiving.

To providing more employment opportunities.

To get easy or current information from central point.

To have a good surroundings.

To supply quality pipes.

To the internationals market in bulk.


F I N A N C I A L D E P A R T M E N T


M a n a g i n g d i r e c t o r

F i n a n c i a l m a n a g e r

A s s i s t a n t o f f i n a n c i a l m a n a g e r

Staff

FINANCIAL GOAL


The firm’s investment and financing decision are unavoidable and continuous. In order

to make them rationally, the firm must have a good. It is generally agreed in theory that the

financial goal of the firm should be the maximization of owner’s the shareholder’s wealth by

as reflected in the market value of share.

FINANCIAL ANALYSIS

INTRODUCTION


The primary objective of financial reporting is to provide information to present and potential

investors and creditors and other in making rational investment, credit and other decisions.

Effective decision making requires evaluation of the past performance of companies and used

by investors, creditors, and professional analysis for analyzing and interpreting the

information contained in financial statements.

Any successful business owner is constantly evaluating the performance of his or her

company, comparing it with the company's historical figures, with its industry competitors,

and even with successful businesses from other industries. To complete a thorough

examination of your company's effectiveness, however, you need to look at more than just

easily attainable numbers like sales, profits, and total assets. You must be able to read

between the lines of your financial statements and make the seemingly inconsequential

numbers accessible and comprehensible.

OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS

Financial statement analysis is the collective name for the tools and techniques that

are intended to provide relevant information to decision-makers. The purpose of

financial statement analysis is to assess a company’s financial health and

performance. Financial statement analysis consists of comparisons for the same

company over period of time and comparisons of different companies either in the

same industry or in different industries.

Financial statement analysis enables investors and creditors to evaluate past

performance and financial position

The starting point in the analysis of a company is to look at the record. Information

about past performance is useful in judging future performance. For Example, trends

of past sales, earning, cash flow, profit margin, and return on investment provide a

basis for evaluating the efficiency of a company’s performance and aid in assessing

its prospects. An assessment of current status will show where the company stands at

present, such as the company’s inventories, borrowings, and cash position. To a large

extent, the expectation of investors and creditors about future performance are shaped

by their evaluation of past performance and current position.


Predication of future performance

Investors and creditors use information about the past to assess the prospects of a company.

Investors expect an adequate return from the company in the form of dividends and market

price appreciation. Creditors expect the company to pay interest and repay the principal in

accordance with the terms of lending. Therefore, they are interested in predicting the earning

power and debt-paying ability of the company.

For example, it is relatively easy to predict the future performance of electricity company

than that of a company that produces movies. Therefore, investors would be willing for a

relatively low return from the Electricity Company, while they would want a higher return in

the form of dividends and market price increases from the Movies Company. Loans to the

Movie Company would carry a higher interest rate than loans to the Electricity Company.

Past Performance of the Company:-

It is common for financial analysis to compare measure of performance

of the company over a period of time. Five or ten year summaries of selected financial data

appear in some annual report. Also, financial track records are cited in company prospectuses

and advertisements. A look at the past performance will show broadly whether the company

is improving or declining. Also, a study of past ratios and percentage may assist in

extrapolating them.

However, fundamental changes in the environment of a company, such as changes in

government regulation, changes in competition, and changes in the cost structure resulting

from technological advances, can make it difficult to project past trends into the future.

Changes in accounting methods would also affect comparability of the past figures. Further,

comparisons, with the company’s own past can, at times, create an illusion of growth leading

to a sense of complacency. For example, an annual rise of 10 per cent in company’s sales

may in itself sound good, but would not be considered adequate if the company’s competitors

are increases.

Industry Standards:-


The performance of a company can be compared with that of other companies in the industry.

Comparisons with industry standard help overcome the limitations of historical comparisons.

For example, if a company has a debt-equity ratio of 2.5:1, while the average debt-equity

ratio in the industry is 1.5:1, the company can be said to have a higher leverage. Industry

comparisons are difficult for diversified companies that operate in several unrelated lines of

business.

For example, Hindustan Lever’s lines of business include soaps, detergents, personal

products, and food. Comparing the company’s performance with a firm that operates in soaps

or detergents would be highly misleading. Another problem with industry comparisons is that

companies often follow different accounting policies. Inventory valuation methods, useful

life estimates for fixed assets, and revenue recognition practices differ across companies. Yet

another difficulty is the lack of uniformity in financial years. Many companies follow the

twelve-month period ending March 31, while a few use other accounting years.

SOURCE OF INFORMATION Individual investors and creditors must often depend upon published sources of

information about a company. The most common sources of information about listed


companies are company reports, stock exchange, business periodicals, and information

services.

Company Reports:-

Every company publishes an annual report, which contains valuable

financial and other information about the company. Annual reports are the beginning and

ending points in obtaining information about individual companies.

The typical Indian Company includes the following documents in its annual report:

Directors’ report

Financial statements

Schedules and notes to the financial statements

Auditor’s report

In addition, some companies provide financial highlights and a summary of financial

performance for the past five or ten years. The annual report is sent to the shareholders of the

company, free of charge. Listed companies are also required to publish a quarterly statement

of financial results within one month from the end of the quarter. These statements are

typically not audited unlike the annual financial statements and are published in leading

newspapers.

Stock Exchanges:-

Listed companies must file copies of their annual reports, as well as additional documents

such as a statement of distribution of share ownership and the quarterly statement, with the

stock exchanges in which they are listed. The Bombay Stock Exchange (BSE) is the oldest

with it. The National Stock Exchange (NSE) is the other leading stock exchange in India.

Both BSE and NSE have number publications giving useful financial and other information

about companies. Listing agreements require that companies keep stock exchanges promptly

informed of major developments affecting them, such as change of management, bonus and

dividend decisions, strikes, and plant closures.

Business Periodicals:-

Business newspaper and magazines are important and, often, timely sources

of financial and business news. The Economic Times is the oldest and the most widely read


financial daily in the country. Business Line, Business Standard, and Financial Express are

the other leading financial dailies in India. Financial and business magazines such as

Business India, Business World and Business Today regularly carry studies of companies and

industries.

Information Services:-

In recent years, a number of information services have sprung up. Periodical

Company and industry studies are brought out by CRISIL and ICRA. These studies contain

condensed financial statements of companies as well as other information such as

management, foreign collaboration, major competitors, and industry overview. Several useful

studies of financial ratios are also available, notably the ones published by the Center for

Monitoring Indian Economy (CMIE).

Internet & intranet:

Search engines like Google go a long way in providing useful information

for such projects. Days have gone when you have to wait for hours to gather information

related to any particular topic. Information technology and Internet has brought the global

world at your fingertip. Local area networks are also key source of information now a day.

Increasing interdependence among the various sub units of the business has made LAN

networks a future to consider as a useful source of secondary information.

The quality of a company’s earnings may be affected by the following:

Accounting methods and estimates used.

Extraordinary items.

Prior period adjustments.

TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS

Very few numbers in financial statements are significant in themselves,

but meaning inferences can be drawn from their relationship to other amounts or their change


from one period to another. The tools of financial statement analysis help in establishing

significant relationships and changes. The most commonly used analytical techniques are:

COMMON SIZE STATEMENT

TREND ANALYSIS

RATIO ANALYSIS

DU PONT ANALYSIS


The common size statement is a one type of comparative analysis statement. Here his

particular statement deals with the all the item of profit & loss account of the company.

Here in this particular statement the sales is considered as 100% and than all the item are

compared with sales by assuring sales is 100 than what be the percentage of the other items.

Common size statement of Balance sheet as on 31st march 2011


Particular 2010-11 2009-10 2008-09

source of funds

shareholder’s funds

Share capital 15.68 14.67 13.03

Reserve & surplus 49.82 49.69 50.29

Secured loan 10.74 13.00 15.00

Unsecured loan 9.34 8.27 8.42

Deferred tax liability14.42 14.37 13.26

Total 100 100 100

Application of funds

Fixed Assets70.26 68.90 65.88

Capital W-I-P2.17 1.62 1.28

Investments0.01 0.01 0.01

Inventories 48.01 42.11 34.95

Sundry debtors15.61 25.38 21.76

Cash & bank balance6.99 5.85 7.01

Loan & advances6.89 6.53 6.40

total current assets77.50 79.87 70.12

total current liabilities-49.93 -50.39 46.84

Net current assets27.57 29.48 23.28

Miscellaneou Expenditure0.01 0 0.001

TOTAL 100 100 100

Liabilities


13%

50%

15%

8%

13%

Liabilities 2008-09Share capital Reserve & surplus Secured loan Unsecured loan Deferred tax liability

Interpretation:- In the year of the 2008-09 the company share capital is 13%, reserve and surplus is 50%, secured loan is 15%, unsecured loan is 9%, deferred liabilities is 13%. So that time the company is initially good position in the market.


15%

50%

13%

8%

14%

Liabilities 2009-10

Share capital Reserve & surplus Secured loan Unsecured loan

Deferred tax liability

Interpretation:-

In the year of the 2009-10 the capital would be very good for the company position .Like the share capital is 15%, secured loan is 13%, deferred tax liabilities are 14%, reserve and surplus is 50%, unsecured loan is also 8%. So that the company position is very better and also

financial strength is very good.

Liabilities

16%

50%

11%

9%

14%

Liabilities 2010-11Share capital Reserve & surplus Secured loan Unsecured loan

Deferred tax liability

Interpretation: In the year of the 2010-11 the company is more growing because of liabilities. share capital of this year is 16%, secured loan is 11%, differed tax


liabilities are 14%, reserve and surplus is 50%,unsecured loan is 9%. So that the company situation is also good this year.

Assets

73%

1%0%

26%

0%

Assets 2008-09Fixed Assets Capital W-I-P InvestmentsNet current assets Miscellaneou Expenditure

Interpretation: In the year of the 2008-09 the company financial strength is very well. Totally fixed assets was 73%, capital in work in progress is 1% , net current assets is 0%, investment was not done the company and miscellaneous expenditure is o% for the company.

69%2%

0%

29%

Assets 2009-10

Fixed Assets Capital W-I-P Investments

Net current assets Miscellaneou Expenditure


Interpretation:- In the year of the 2009-10 total fixed assets will be the 69%, capital work in progress is 0%, investment will be also Neel and company net current assets will be 29%.

Assets

70%2%0%

28%0%

Assets-2010-11

Fixed Assets Capital W-I-P Investments

Net current assets Miscellaneou Expenditure

Interpretation:-

In the year of the 2010-11 the financial position of the company is good. Fixed assets are the 70%. Capital in work in progress is 2.17,investment is almost 0, but the net current assets is the company 28%.company is better position in this year.


Common size statement of the Profit and loss account at the year of the 2011.

Interpretation:- In the common size statement of the profit& loss account the year ending of the 31st march 2011 3.94 the company will be become a financial stable growing position and also continuously growing for the above year.


Particular 2010-11 2009-10 2008-09

net: Income from sales & operation

98.93 99.1799.14

Generation 1.06 0.820.84

Other income 0.01 0.010.01

Total 100 100100

Expenditure

Material cost 65.09 65.6666.44

Emp. Remuneration And benefits

3.73 4.284.31

Financial expense 2.21 2.14

1.74

Other expenses21.29 19.63

20.94

Depreciation 2.61 3.002.60

Total Expenditure -94.93 -94.72

96.02

Net profit 6.16 5.283.98

Less: Income 0.47 0.560.63

Less: Deferred tax liability-1.76 -1.30

1.34

Profit after taxation 3.94 3.42

2.01

Trend analysis on the balance sheet

Particular 2008-09 2009-10 2010-11source of funds


Share capital 100 124.52 155.78Reserve & surplus 100 109.26 128.27Total owned funds 100 112.40 133.93Loan fundsSecured loan 100 95.82 92.70Unsecured loan 100 108.48 143.59

Deferred tax liability 100119.85 140.84

Total 100

110.57 129.48


Fixed AssetsGross Block 100 105.75 124.14Less: Depreciation 100 107.79 122.82Net block 100 104.58 124.89Capital W-I-P 100 126.54 199.20Investments 100 113.04 117.39

Current assets, loan & Advance

Inventories 100 120.48 160.86Sundry debtors 100 116.64 84.01

Cash & bank balance 10083.45 116.78

Loan & advances 100 102.07 126.10Current liabilities, and provisionLiabilities 100 107.02 123.86Provision 100 126.94 158.81Net current assets 100 126.65 138.68Miscellaneous Expenditure 100 0.00 271.43

TOTAL 100110.57 129.48


2008-2009 2009-2010 2010-2011

0

20

40

60

80

100

120

140

100

110.57

129.48

SOURCES OF FUND

SOURCES OF FUND

Interpretation :- In the above graph we can see that the sources of funds are increasing in the year of 2009-10and also continuously increase the in 2010-11.

2008-2009 2009-2010 2010 -2011

0

20

40

60

80

100

120

140

100 110.57129.48

APPLICATION OF FUND

APPLICATION OF FUND

Interpretation:- in the above graph shows that the application of will be increasing in the

continuously for all the year. So that the company become good financial position.

Trend analysis on the profit & loss account


Particular 2008-09 2009-10 2010-11

Income Sales & income from Operations 100 116.60 151.48Less: Excise Duty 100 126.33 179.31

100 115.42 148.11Income from powerGeneration 100 112.43 186.46Other income 100 115.75 164.57

TOTAL 100 115.40 148.43Expenditure Material cost 100 114.06 143.88Employee’s Remuneration And benefits 100 114.75 126.99Financial expense 100 142.02 186.86Other expenses 100 108.18 149.26Depreciation 100 133.28 147.51

100 113.83 145.17Net profit 100 153.17 227.23Less: Income 100 103.62 109.33Less: Deferred tax liability 100 112.05 192.65Profit after taxation 100 195.87 286.80Balance brought forward 100 115.35 237.33

100 158.63 263.92Profit available for Appropriation AppropriationProposed dividend 100 118.23 147.92Dividend tax 100 123.71 154.72Transfer to general 100 118.83 148.67Reserve 100 122.34 98.31Balance carried forward 100 382.47 390.56

100 158.63 151.11Earning per share (in Rs.) 100 194.40 249.57


2008-2009 2009-2010 2010-20110

20

40

60

80

100

120

140

160

100115.4

148.43

sales &other income

sales &other income

Interpretation:- In the year of the the 2008-2009 in the 100, also that will be

increase in 2009-2010 will 115.4, and also in the year of the 2010-2011 148.43. so

that it will be continuously increase for the year to year.

2008-2009 2009-2010 2010-20110

50

100

150

200

250

300

100

195.87

286.8

profit after tax

profit after tax

Interpretation: in the year of the 2008-09in the 100, in the 2009-10 in to the that

will be increase 195.87, 2010-11 continuously growing 286.8.so that the financial

strength will be increase.


RATIO ANALYSIS

The relationship of one item to another expressed in simple mathematical form is known as the ratio. A company keeps fit by ensuring that among another things, its various financial propositions are kept healthy. Its business performance can be measured the use of ratio. A ratio is quotient of two numbers. It must be interpreted against some standards. In assessing the financial stability of firm, a management should apart from profitability, be interested in relative figures rather than in absolute figures. In fact an analysis of financial statements is possible only when figures are express as percentages or ratios. There is growing body of evidence that ratio can be directly helpful as basis for making predication. A ratio is a mathematical relationship between two quantities. It is of major important for financial analysis. It engages qualitative measurement and shows precisely how adequate is one key item in relation to another. To evaluate the financial condition and purpose of a firm the financial analyst need certain yardsticks. The yardsticks frequently used are ratio or an index relating to pieces of financial data to each other. Not only those who manage a company but also its shareholders and creditors are interested in knowing about the financial position or earning capacity of that concern.

ADVANTAGES:

I. Lee observed that the process of producing financial ratio is essentially concerned with the identification of the significant accounting data relationships, which give the decision makers insights into the company that is assessed.

II. A ratio analysis involves the study of total financial picture. By basing conclusions upon thorough understanding of the important of each ratio, the analyst can recommend and indicate positive action with confidence.

III. One of the most fruitful areas for the use of traditional financial ratio seems to be that of predication company failures.

IV. Ratio are tool which enables management to analysis business situation and to monitor their performance as well as that of their competitors.

V. Ratio analysis helps the management to diagnose the situations, monitor the performance and help plan forward.


VI. There are certain priority ratios for chief executives. These are related to key areas, which are common to nearly all businesses and with which top management is seriously concerned. These priority ratios enable the chief executive to understand the relationship between his organization, at one end, and the market, investors, suppliers and employees. He is also in a position to watch how well is the organization using its assets and how well it is providing for the future.

VII. There are ratios which help the marketing manager, the purchasing manager, the financial manager and other representing the middle management to know the what positions are like how to make a way in typical situations, from time to time.


Liquidity Ratio: s This ratio measures the firm’s ability to meet current obligation. A firm ensures that it

does not surer from lack of liquidity and also does not have excess liquidity. The failure of a co. to meet its obligation due to lack of sufficient liquidity will result in a poor credit worthiness loss of creditor’s confidence or even in legal tangle resulting in the closure of the company.

Current ratio: -

CURRENT RATIO= CURRENT ASSETSCURRENT LIABILITIES

2008-2009 2009-2010 2010-20111.44

1.46

1.48

1.5

1.52

1.54

1.56

1.58

1.6

1.49

1.59

1.55

Interpretation: This current ratio measures the firms ability to meet it current

obligation. Generally 2:1 ratio is preferable here the current ratio is high because

of high current that represent the first high ability to meet it’s current obligation.

In year 2008-09 was 1.49, 2009-2010 and 2010-2011 are 1.59 and 1.55

respectively.


PARTICULARS 2008-09 2009-2010 2010 -2011CURRENT ASSETS 4300.75 4898.81 5566.39CURRENT LIABILITY 2872.95 3090.55 3586.31CURRENT RATIO 1.49 1.59 1.55

Quick ra t io

Quick RATIO= CURRENT ASSETSCURRENT LIABILITIES

PARTICULARS 2008-2009 2009-2010 2010-2011CURRENT ASSETS 2157.21 2316.18 2118.33CURRENT LIABILITY 2 8 7 2 . 9 5 3 0 9 0 . 5 5 3586.31CURRENT RATIO 0.75 0.75 0.59

2008-2009 2009-2010 2010-2011

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.750000000000004

0.750000000000004

0.59

Ratio

Ratio

Interpretation: Quick ratio represents the company ability to meet its

immediate obligation. Here the ratio is whole year the ratio excludes the inventory

and bank over draft. Here the ratio the year 2008-09, 2009-2010 and 2010-2011

are 0.75, 0.59 and 0.55 respectively.


N e t w o r k i n g c a p i t a l r a t i o

Net working capital means the different between current assets & current liabilities:

excluding short term bank borrowing is called net working capital or are as firms

liquidity.

CURRENT RATIO=NET WORKING CAPITALNET ASSETS

N e t W o r k i n g C a p i t a l : - C u r r e n t A s s e t s – C u r r e n t L i a b i l i t i e s

N e t A s s e t s : - F i x e d A s s e t s + C u r r e n t A s s e t s – C u r r e n t L i a b i l i t i e s

PARTICULARS 2008-2009 2009-2010 2010-2011NET WORKING CAPITAl 1 4 2 7 . 8 1 8 0 8 . 2 6 1 9 8 0 . 0 8

NET ASSETS 5 5 4 7 . 6 6 1 3 3 . 1 8 7 1 8 2 . 6 0CURRENT RATIO 0.26 0 . 2 9 0 . 2 8

2008-2009 2009-2010 2010-2011

0.245

0.25

0.255

0.26

0.265

0.27

0.275

0.28

0.285

0.29

0.26

0.29

0.28

Ratio

Ratio

Interpretation:- The ratio shows the proportion of the working capital in net

assets. If the ratio is high than the more proportion of working capital in total

assets. If the ratio is for the higher than the working capital remain idle and the


ratio is lower than the it is bad for the company. Here the ratio for year 2008-09,

2009-2010 and 2010-2011 are0.26, 0.29 and 0.28 respectively.

L e v e r a g e R a t i o

To judge the long-term financial position of the firm financial leverage of capital

structure ratio are calculated. The process of magnify the share holder return through the

use of debt is called “Financial leverage” or “Financial gearing” or “Trading on equity”.

Leverage ratio are calculates of measure the financial risk and the firm’s ability if using debts.

D e b t s e q u i t y r a t i o : T O T A L D E B T S

N E T W O R T H

T o t a l D e b t s = S e c u r e d L o a n + u n s e c u r e d l o a n + S u n d r y C r e d i t o r

PARTICULARS 2008-2009 2009-2010 2010-2011TOTAL DEBT 2 4 3 4 . 2 4 2 8 6 1 . 2 0 2 5 6 3 . 7 4

NET WORTH 3512.28 3 9 4 7 . 6 6 4 7 0 4 . 1 2

DEBT EQUITY RATIO 0.69 0 . 7 2 0 . 5 4

N e t w o r t h = S h a r e C a p i t a l + R e s e r v e & S u r p l u s


2008-2009 2009-2010 2010-2011

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.690000000000001

0.720000000000001

0.54

Ratio

Ratio

Interpretation:- The debt equity ratio describes lenders contribution for each rupee of

the owner’s contribution. Here the debts equity ratio for the year 2008-2009, 2009-

2010 and 2010-2011 are 0.69, 0.72 and 0.54 respectively.

D e b t s r a t i o

The some type of debts may be used analysis the large term solvency of a firm. The total

debt will include the short term and long term borrowing from financial justitution,

debenture, differed payment agreement for laying capital equipment bank borrowing

public deposit and other interest-bearing loan.

T o t a l d e b t s

D e b t s r a t i o = N e t a s s e t s


2008-2009 2009-2010 2010-20110

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0.44 0.47

0.36

Ratio

Ratio

Interpretation:- Here by looking this figures debts ratio. We that there is gradual

change in the level of propriety funds rashers than vendors contribution on year 2008-

2009, 2009-2010 and 2010-2011 the debts ratio of 0.44, 0.47 and 0.36 respectively.

A c t i v i t y r a t i o

The activities ratio are employed to evaluate the efficiency with the firm manager utilize

its assets. Their ratio are also called “Term over ratio” the reason is because they indicate

the opened with which assets are counter or turn over into sales. Thus this ratio shows the

relationship between share assets. S a l e s

N e t a s s e t s t u r n r a t i o = N e t a s s e t s

PARTICULARS 2008-2009 2009-2010 2010-2011SALES 1 1 4 3 7 . 0 9 13336.07 17325.35

NET ASSETS 5547.19 6133.18 7182.60


PARTICULARS 2008-2009 2009-2010 2010-2011TOTAL DEBT 2434.24 2861.2 2563.74NET ASSETS 5547.19 6133.18 7182.60DEBTS RATIO 0.44 0.47 0.36

NET ASSETS TURN OVER RATIO

2.06 2.17 2.41

2008-2009 2009-2010 2010-20111.8

1.9

2

2.1

2.2

2.3

2.4

2.5

Ratio

Ratio

Interpretation:- Net assets turn over measures the company ability of sales for a

given level of assets. A firm’s ability to produce a large volume of sales for a given

amount of net assets is the most important aspects of its operating performance. Here

this ratio is high in year2008-2009 i.e.2.06 2009-2010 i.e. 2.17 and in year 2010-2011

i.e. 2.41 respectively.

T o t a l a s s e t s t u r n o v e r r a t i o

Total assets turn over ratio is computed on the total assets turn over in addition to or

instead of assets turn over. This ratio shows the firm’s ability in generation sales from all

financial resources committed total assets.

Sales


Total assets turn over ratio = T o t a l a s s e t s

T o t a l a s s e t s = C u r r e n t a s s e t s + F i x e d a s s e t s

PARTICULARS 2008-2009 2009-2010 2010-2011SALES 11437.09 11336.07 17325.35TOTAL ASSETS 8419.7 9223.73 10768.91TOTAL ASSETS TURNOVER RATIO

1.36 1.45 1.61

2008-2009 2009-2010 2010-20111.2

1.25

1.3

1.35

1.4

1.45

1.5

1.55

1.6

1.65

Ratio

Ratio

Interpretation:- The ratio indicated the relationship between sales & total assets.

This ratio that how much sales in generated by company with given of level of total

assets. This ratio for year of 2008-2009, 2009-2010 and 2010-2011 are 1.36, 1.45 and

1.61 respectively.

F i x e d a s s e t s t u r n o v e r r a t i o

The fixed assets turn over is established relationship between company’s fixed assets with

its sales

S a l e s


F i x e d a s s e t s t u r n o v e r r a t i o = F i x e d A s s e t s

PARTICULARS 2008-2009 2009-2010 2010-2011SALES 11437.09 13336.07 17325.35FIXED ASSETS 4118.95 4324.92 5202.52FIXED ASSETS TURNOVER RATIO

2.77 3.08 3.33

2008-2009 2009-2010 2010-2011

0

0.5

1

1.5

2

2.5

3

3.5

Ratio

Ratio

Interpretation:- The fixed assets turn over shows the sales of accompany for a

given level of fixed assets means. How much a sale generated by a company has a

good performance. The ratio for year 2008-2009, 2009-2010 and 2010-2011 are 2.77,

3.08 and 3.33 respectively.

Debtors turn over ratio

Sales

Fixed assets turn over ratio =

Average debtors


Opening stock + Closing stock

Average DEBTORS

2

PARTICULARS 2008-2009

2009-2010 2010-2011

SALES 11437.09 13336.07 17325.35AVERAGE DEBTORS 1071.77 1466.79 2376.32FIXED ASSETS TURNOVER RATIO 10.67 9.09 7.29

10.67

9.09

7.29

Ratio

2008-20092009-20102010-2011

Interpretation:- Debtors turn over indicator the number of times debtors turn over

each year. Debtor’s turn over is more than more efficient is the management of credit

by company. In year 2009-2010, the ratio is more i.e. 9.09 times so the efficiency of

management is more in credit management by this company generally this ratio is

high in all other year.

Current assets turn over ratio

The current assets turn over means the relationship firm’s current assets with the sales

Sales


Current assets turn over ratio =

Current assets

PARTICULARS 2008-2009 2009-2010 2010-2011SALES 11437.09 13336.07 17325.35CURRENT ASSETS 4300.75 4898.81 5566.39CURRENT ASSETS TURNOVER RATIO

2.65 2.72 3.11

2008-20092009-2010

2010-2011

2.4

2.5

2.6

2.7

2.8

2.9

3

3.1

3.2

Ratio

Ratio

Interpretation:- Here by looking the graph of current assets turn over ratio by

finding that there is a working or having some sort of increasing decreasing tired in

the graph which may clear that the current assets of firm are when increase than sales

deviate or when sales increase that current assets decreases. In the above shows the

graph in the year 2008-2009 ratio was 2.65, 2009-2010 in the ratio is the 2.72 and also

the year 2010-2011 in the ratio is 3.11.

The current assets turn over ratio of any firm shows the relationship between the company

sales with its. Current assets. Here by looking the figures of current assets turn over ratio


we find that there is a continuity of ratio, which may the positive impact of company’s

sales or the maintaining of the company’s current assets as what the company is required.

P r o f i t a b i l i t y r a t i o

in simple language profit means a different between revenues & expenses over a period of

time profit is an ultimate out of company. no future if it is fails to make sufficient profits.

Generally two types of profitability ratio.

Profitability in relation to sales.

Profitability in relation to investment.

G r o s s p r o f i t m a r g i n r a t i o

T h e g r o s s p r o f i t m a r g i n r a t i o o f f i r m i s t h e r a t i o o f c o m p a n y

g r o s s p r o f i t d i v i d e d b y s a l e s .

G r o s s p r o f i t

= ´ 1 0 0

S a l e s

Gross profit = Sales – Cost of good sold

Cost of good sold = opening stock + purchase +purchase Exp – Closing stock

PARTICULARS 2008-2009 2009-2010 2010-2011


GROSS PROFIT 4460.46 6134.59 9182.64SALES 11437.09 13336.07 17325.75GROSS PROFIT MARGIN RATIO 39 46 53

2008-2009 2009-2010 2010-2011

0

10

20

30

40

50

60

Gross Profit Margin Ratio

gross profit margin ratio

Interpretation:- The gross profit margin ratio reflect the efficiency with which

management product each unit of products. If the ratio is high the management is

more efficiency the low gross profit margin ratio indicates the lower cost of goods

sold due to inability of management. In purchasing a raw material and inefficient of

utilization. Gross profit margin ratio is the year of the 2008-2009 in 39,2009-2010 in

46and also the 2010-2011 in the 53.


N e t p r o f i t m a r g i n r a t i o

The net profit margin ratio is show the company’s profit position we derived the formula

of net profit margin ratio.

P r o f i t a f t e r t a x

= ´ 1 0 0

S a l e s

PARTICULARS 2008-2009 2009-2010 2010-2011PROFIT AFTER TAX 207.26 405.97 594.53SALES 11437.09 13336.07 17325.35NET PROFIT MARGIN RATIO

1.81 3.04 3.43


22%

37%

41%

Ratio

2008-20092009-201020010-2011

Interpretation:- This ratio expresses the companies over all ability of generation

each rupees of profit is a sales. It expresses the company’s ability of manufacturing,

administrating and selling the product. The ratio for 2008-2009 is high income

company has a more profit in relation to sales. The ratio is low year 2008-2009

i.e.1.81 so the company’s has a more expenses in year. So the net profits decreases.

R e t u r n o n e q u i t y : -

The return on equity means the rate of return on equity share by the holder of the share.

The return on equity is calculated to see the profitability of owner’s investment

P r o f i t a f t e r t a x

= ´ 1 0 0

N E T W O R T H

PARTICULARS 2008-2009 2009-2010 2010-2011PROFIT AFTER TAX 207.26 405.97 594.53


NET WORTH 385.61 611.70 582.71RETURN ON EQUITY 53.74 66.37 102.02

2008-20092009-2010

2010-2011

0

20

40

60

80

100

120

Ratio

Ratio

Interpretation:- Return on equity shows the earning of equity shareholders, this

shows that how much rate of return shareholder get. Return on equity is higher in all

the year. But somewhat high year 2010 -2011 i.e. 102.02

Rate of return on investment = profit after tax

Total assets


2008-2009 2009-2010 2010-20110

10

20

30

40

50

60

24.87

44.63

55.43

RATIO

RATIO

Interpretation:- in the above data shows that the company rate of return will be in the year of

the 2008-09 in the 24.87%, 2009-2010in the 44.63%,2010-2011 in the 55.43%. so that theit

will become the good position to the company.

DU PONT ANALYSIS:

The Du Pont analysis is carried out for the last year, explanation is described by each and every phase.

The du Pont company of the U. S. pioneered a system of financial analysis which has relied

wide spread reorganization and acceptances. A useful system of which considering important

relationship base on information found in financial statement. It has been adopted many

firm’s in some firms or other.

The earning power or the 1201 ratio is a central measure of the over all profitability and

operational efficiency of a firm. It’s shows international of the profitability and activity of

ratio. It implies that the performance of a firm can be improved either by generation more

sales volume per rupee of investment or by increasing the profit margin per rupee of

investment or by increasing in the profit margin per rupee of sales.

2008-2009 Du Pont chart

VJKM Institute of management & computer studies vadu. RETURN ON INVESTMENT

24.78%

PROFIT MARGIN TOTAL SALES TURNOVER

PARTICULARS 2008-2009 2009-2010 2010-2011PROFIT AFTER TAX 207.26 405.97 594.53TOTAL ASSETS 8419.7 9223.73 10768.91RETURN ON INVESTMENT 24.87% 44.63% 55.43%

×

÷

2009-10

×

÷


PROFIT MARGIN TOTAL SALES TURNOVER

NET WORKING CPTL1427.8

INVESTMENT0.23

SALES11437.09

OPERATING EXP.9610.84

TOTAL FIXED ASSETS6357.65

ACCUMULATED DEP2317.12

CURRENT ASSETS4300.75

CUR. LIB. + PROV.2872.95

RETURN ON INVESTMENT 44.63 %

PROFIT MARGIN9.41%

TOTAL SALES TURNOVER4.74 times

EBIT983.23

NET SALES13336.07

FIXED ASSETS4225.69

2010-2011

×

÷



INVESTMENT0.26

SALES13336.07






RETURN ON INVESTMENT55.43%

PROFIT MARGIN13.22

TOTAL SALES TURNOVER4.19 times

EBIT1342.41

NET SALES17325.75

FIXED ASSETS5046.31


INVESTMENT0.27

PROBLEMS IN FINANCIAL STATEMENT ANALYSISFinancial statement analysis can be a very useful tool for understanding a firm’s performance

and condition. However, there are certain problem and issues encountered in such analysis,

which call for care, circumspection, and judgment in such an exercise.

HEURISTIC AND INTUTIVE CHARACTER :-Most of the ratios found in the traditional

literature on financial statement analysis have been proposed in a some what heuristic or

intuitive fashion. As Horrigan says: “From a negative viewpoint, the most striking aspect of

ratio analysis is the absence of an explicit theoretical structure. Under the dominant approach

of ‘pragmatically empiricism ‘, the user of ratio is required to rely upon the authority of an

author’s experience.

DEVELOPMENT OF BANCHMARKS:

Many firms, particularly the larger ones, have operations spanning a wide range of industries.

Given the diversity of their product lines, it is difficult to find suitable benchmarks for


SALES17325.35






evaluating their financial performance and condition. Hence, it appears that meaningful

benchmarks may be available only for firms, which have a well-defined industry

classification. Even for such firms, at least in India, the financial analyst may run into a

difficulty.

WINDOW DRESSING: Firms may resort to window dressing to project a favourable

financial picture. For example, a firm may prepare its balance sheet at a pint when its

inventory level is very low. As a result, it may appear that the firm has a very comfortable

liquidity position and a high turnover of inventories.

PRICE LEVEL CHANGES: Financial accounting, as it is currently practiced in India and

most other countries, does not take into account price level changes. As a result, balance

sheet figures are distorted and profits misreported. Hence, financial statement analysis can be

vitiated.

VARIATION IN ACCOUNTING POLICIES: Business firms have some latitude in the

accounting treatment of items like depreciation, valuation of stock s, research and

development expenses, foreign exchange transactions, installment sales, preliminary and pre-

operative expenses, provision of reserves, and revaluation of assets.


FINDINGS:

At the end of the financial analysis of the company the following are the various

findings:

The current ratio of the company is quite satisfactory. Although there is a decline but

still the company is maintaining a ratio far greater than the ideal ratio. However in

such case the quality of the current assets is necessary to be analyzed.


Considering the liquidity position the major contributors to the company current

assets are the debtors and the inventories. So a high current ratio or quick ratio does

not mean that the company has sufficient liquidity. The company needs to focus more

on the cash and other current assets.

Considering the liquidity position there is a decline in the interval measure by

almost 50 percent which indicates the tight liquidity position of the company.

Since the last financial year there appears to be a reduction in the use of the debt

funds in the working capital financing of the company

.Considering the capital structure of the company almost 60-70 percent financing of

the company is carried out through the debt funds while the equity financing

contributes to only 25-30 percent of the financing.

The total liabilities of the company constitutes about 60-70 percent of the company

total assets. However in the present financial year this ratio has decreased due to

increase in the use of equity financing by the company.

The company has the ability to match the expenses of interest as well as the fixed

charges well with their earnings. This ratio is quite consistently high for the company.

In the last two financial years the inventory holding periods and the debtors collection

period for the company has increased which has a direct impact on the current ratio of

the company.

SUGGESTIONS:

The company needs to plan its strategy regarding the current assets utilization.

The company needs to manage the inventories well because over the last two

financial years there is a constant rise in the inventory holding periods. This

could lead to reduced profit margins and reduction in the liquidity position.


There is also a get-out observed in the debtors’ collection policy which

indicates that the company needs to collect its debt well. Moreover there is a

constant rise in the debtors’ quantity which is a matter of concern for the

company.

The company prefers debt financing over equity financing. However the

company needs to be careful in selecting an optimum mixture of the debt and

equity. This can have an effect on the solvency of the firm.

There is a constant rise in the operating expenses of the firm. So the company

needs to plan an effective cost reduction strategy to reduce the operating

expenses and thereby improve the net profit margins.

The company needs to have a closer watch particularly on the additional

expenses and the manufacturing expenses. In additional expenses also the

administrative expenses seems to be troublesome.

LIMITATIONS OF THE ANALYSIS:

This financial analysis carried out does not consider the effect of the opportunity cost

of money. It ignores the present value and the future value of money.

The standards for comparison data of the other companies are not available easily. So

an overall view of the analysis cannot be brought about through this analysis.


No information related to the effects of the external factors on the business conditions

and the company policy can be obtained through this analysis.

The analysis carried out is based only on the past information. No one can

successfully predict the future conditions and strategies based on this data.

Moreover at times there exists a confusion to record some of the expenses or financial

terms into both different categories. So one cannot be 100 percent accurate in such

analysis.

The do Pont company of the U. S. pioneered a system of financial analysis which has

relied wide spread reorganization and acceptances. A useful system of which

considering important relationship base on information found in financial statement. It

has been adopted many firm’s in some firms or other.

The earning power or the 1201 ratio is a central measure of the over all profitability

and operational efficiency of a firm. It’s shows international of the profitability and

activity of ratio. It implies that the performance of a firm can be improved either by

generation more sales volume per rupee of investment or by increasing the profit

margin per rupee of investment or by increasing in the profit margin per rupee of

sales.

At last, I conclude my report that “Ratnamani Techno Cast ltd.” Is a good company in case

of financial. There are some problems taking by it but overall the position of “Ratnamani

Techno Cast ltd.” Is good.


During my project training I saw that the entire office staff are well-organized responsibility.

Thus office management of the company has improved. Also I found during the training that

““Ratnamani Techno Cast ltd.” Is welcoming to all the comers in ““Ratnamani Techno Cast

ltd.”.”

So, I wish that the company will have delight and bright future for coming year and wish all

the best for solving every problem performing to the company.

The most important which I have learn in unit training is “Industrial discipline”. I cardinally

thanks to all the officers and member of the unit who assign their precious time to me for

providing the training in aspect.

BOOKS:


Marketing Management PHILLIP KOTLER

Financial Management I. M. PANDEY

Financial Management PRASANNA CHANDRA

Financial Management KHAN & JAIN

Marketing Research NARESH K MALHOTRA

MAGAZINES:

Successful Marketing Research: the complete guide to getting and using essential

information by Edward i. Hester

Marketing Research: text and cases by W. Bruce Wrenn

Review of Marketing Research by Naresh K Malhotra

WEB SITE

www.ratnamanitechnocast.com

1) http://www.ratnamanitechnocasts.com/profile.htm

2) http://www.ratnamanitechnocasts.com/products_view.htm

3) http://www.ratnamanitechnocasts.com/manufacturing_facilities.htm

4) http://www.ratnamanitechnocasts.com/quality_assurance.htm

SEARCH ENGINE:-

Google


http://www.ratnamanitechnocasts.com/quality_assurance.htm

http://www.ratnamanitechnocasts.com/manufacturing_facilities.htm

http://www.ratnamanitechnocasts.com/products_view.htm

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31 ST MARCH 2011

Particular 2010-2011

(Rs. in lakh)

2009-2010

(Rs. in lakh)

2008-09

Income

Sales & income from

Operations 17325.35 13336.07 11437.09

Less: Excise Duty 2219.21 1563.57 1237.65


15106.14 11772.50 10199.44

Income from power

Generation 161.77 97.54 86.76

Other income 2.09 1.47 1.27

TOTAL 15270.00 11871.51 10287.47

Expenditure

Material cost 9833.24 7795.37 6834.54

Employee’s Remuneration

And benefits 562.72 508.47 443.13

Financial expense 333.88 253.77 178.68

Other expenses 3215.69 2330.67 2154.49

Depreciation 394.31 356.27 267.31

14339.94 11244.55 9878.15

Net profit 930.10 626.96 409.32

Less: Income 70.32 66.65 64.32

Less:Deferred tax liability 265.35 154.34 137.74

Profit after taxation 594.43 405.97 207.26

Balance brought forward 423.28 205.73 178.35

1017.71 611.70 385.61


Profit available for

Appropriation

Appropriation

Proposed dividend 112.60 90.00 76.12

Dividend tax 14.42 11.53 9.32

Transfer to general 127.02 101.53 85.44

Reserve 241.08 300.00 245.22

Balance carried forward 214.61 210.17 54.95

582.71 611.70 385.61

Earning per share (in Rs.) 5.79 4.51 2.32

Balance sheet as on year ended 31st march 2011

Particular 2010-2011

(Rs. in lakh)

2009-2010

(Rs. in lakh)

2008-09

(Rs. In lakh)

source of funds



Share capital 1126.01 900.00 722.8

Reserve & surplus 3578.11 3047.66 2789.48

4704.12 3947.66 3512.28

Loan funds

Secured loan 771.35 797.36 832.12

Unsecured loan 671.05 506.98 467.34

1442.40 1304.34 1299.46

Deferred tax liability 1035.78 881.44 735.45

Total 7182.30 6133.44 5547.19


Fixed Assets

Gross Block 7892.24 6723.21 6357.65

Less: Depreciation 2845.93 2497.52 2317.12

Net block 5046.31 4225.69 4040.53

Capital W-I-P 156.21 99.23 78.42

5202.52 4324.92 4118.95

Investments 0.27 0.26 0.23

Current assets, loan &

Advance

Inventories 3448.06 2582.63 2143.54

Sundry debtors 1121.34 1556.86 1334.78

Cash & bank balance 502.38 358.97 430.18

Loan & advances 494.61 400.35 392.25

5566.39 4898.81 4300.75


Less:

Current liabilities

and Provision

Liabilities 3459.29 2989.02 2792.97

Provision 127.02 101.53 79.98

3586.31 3090.55 2872.95

Net current assets 1980.08 1808.26 1427.8

Miscellaneous

Expenditure 0.57 0.00 0.21

TOTAL 7182.30 6133.44 5547.19


manda project1

Business

ratnamani techno cast

manager of ratnamani

ivisited ratnamani techno

marketing research report

days management

financial goal

financial statement36

financial analysis32