microinks accounts project

8/7/2019 MicroInks Accounts Project

http://slidepdf.com/reader/full/microinks-accounts-project 1/42

MICRO INKS LIMITED

1 | P a g e

Financial Analysis of Construction Industry:

Company Name: MICRO INKS LTD

MICROINKS LTD

Guided By, Submitted

Mr. Dharmesh Shah

Roll No: P1025

Submitted To

NR Institute of PGDBM first year

(Academic Year 2010-11)



MICRO INKS LIMITED

2 | P a g e

PREFACE

Ink is essence of life. Life without ink is hard to conceive. Centuries ago, it was used to

express thoughts and communicate. And even today, its impact on our life is remarkable, crucial

and indelible.

Micro Inks Corporation is the first step towards establishing a powerful global presence

by Hindustan Inks & Resins Ltd. Micro Inks creates a variety of inks viz. web heat-set inks, new

colors and black inks, sheet fed inks, publication gravure inks and many more. Micro Inks is all

set to be amongst the top five in the US ink industry.

This project report has helped me get an exposure to the practical aspects of organizations

functions. My experience at Micro Inks has been useful to understand the application of my

academic knowledge in an organization and has added to the pool of my professional knowledge.

With the help of financial statements an exposure to the business world is gained. From

the company µMICRO INKS¶ I learnt many accounting concepts and principles, which will be

useful for a long period of time. This project report presents a study of a general working of an

organization and its financial statements. In spite of our best efforts, there may be omission and

errors for which we take full responsibility.

The report consists of all the information regarding the company, starting from its present

standing in the Market and as well as in construction industry. With this objective in mind I

humbly hope that this shall further extend the knowledge we possess about the construction

industry.



MICRO INKS LIMITED

3 | P a g e

ACKNOWLEDGEMENT

I would like to express my most sincere thanks to respected MR. DHARMESH SHAH

PROF. of NRIBM for giving me an unmatchable opportunity to learn and progress. This will

surely enable me to move forward in the field of management. It was a great practical experience

where I could learn how the books were implied into industries.

I even express deep sense of gratitude towards my guide Prof. DHARMESH SHAH

who showed me the right path when I faltered or had any doubts.

My deepest thanks to all the people who directly or indirectly supported me in making

this financial project report with object oriented and useful for others.

Ashish Navagamiya

NRIBM



MICRO INKS LIMITED

4 | P a g e

Table of Contents:

Sr.No:

1 Introduction 7

2 Executive summary 9

3 Economic analysis 10

4 Industry analysis 11

5 Financial statement analysis 15-38

-5.1. Ratio analysis 15

-5.2. Common-size statement 30

-5.3. DuPont analysis

-5.4. Trend analysis

35

6 Finding 39

7 Recommendations 40

8 Conclusion 41

9 Bibliography 42



MICRO INKS LIMITED

5 | P a g e

Table of List

Sr.No: Particulars Table

No:

Pg.No:

1 Current Ratio 5.1 15

2 Inventory turnover Ratio 5.2 16

3 Debtors turnover Ratio 5.3 17

4 Fixed assets turnover Ratio 5.4 18

5 Gross profit Ratio 5.5 19

6 Net profit Ratio 5.6 20

7 Book value per share Ratio 5.7 21

8 Earning per share Ratio 5.8 22

9 Dividend per share Ratio 5.9 23

10 Debt-equity Ratio 5.10 24

11 Asset turnover Ratio 5.11 25

12 Proprietary Ratio 5.12 26

13 Cash reserve Ratio 5.13 27

14 Quick Ratio 5.14 28

15 Return on capital equity 5.15 29



MICRO INKS LIMITED

6 | P a g e

Table of Chart:

Sr.No: Particulars Table

No:

Pg.No:

1 Current Ratio 5.1 15

2 Inventory turnover Ratio 5.2 16

3 Debtors turnover Ratio 5.3 17

4 Fixed assets turnover Ratio 5.4 18

5 Gross profit Ratio 5.5 19

6 Net profit Ratio 5.6 20

7 Book value per share Ratio 5.7 21

8 Earning per share Ratio 5.8 22

9 Dividend per share Ratio 5.9 23

10 Debt-equity Ratio 5.10 24

11 Asset turnover Ratio 5.11 25

12 Proprietary Ratio 5.12 26

13 Cash reserve Ratio 5.13 27

14 Quick Ratio 5.14 28

15 Return on capital equity 5.15 29



MICRO INKS LIMITED

7 | P a g e

COMPANY INFORMATION

Micro Inks Ltd (MICRO) is a part of US $ 239 million Bilakhia

group, which has diverse interests in printing inks, resins,

flushed pigments and crop protection chemicals. Today, through

the years of growth, MICRO has transformed itself into a multi-

dimensional, multi-national company offering a comprehensive

range of quality products, efficient customer service and a wide

distribution network.

MICRO is the undisputed market leader in the country commanding a market share of 30%+ in

the US $ 200 million domestic inks industry. In the process, it also created an enviable track

record of one of the fastest growing company and took its annual sales figures galloping from a

mere US $ 5 million in 1993 - 94 to an astonishing increase to US $ 146 million. The meteoric

ascent of MICRO to the position of a market leader was primarily the result of the efforts of the

people at the helm of affairs - The Bilakhia Group.

Through the years of growth, MICRO has transformed itself into a multi-dimensional, multi-

location company offering a comprehensive range of quality products, efficient customer service

and a wide distribution network. In India, It is a marketing powerhouse with 12 branches, 5

technical centers and around 500 distributors. Today, MICRO has spread its wings globally with

a distribution network in more than 50+ countries.

MICRO is also the only Printing Inks Company in India, and amongst two or three companies in

the world, to have successfully implemented SAP / R3 solution, integrating its marketing offices

through satellite links. Together all the elements will work as a single force to offer value to its

customers.

Today the company with a modest beginning has grown and consolidated its strengths, skills andpeople to achieve a unique enterprise. One which is on its way to becoming a major player in the

global market. A reality, which it achieved through a well thought out and executed business

strategy.



MICRO INKS LIMITED

8 | P a g e

Setting up operations in the world's most highly competitive ink market, USA with a company

called Micro Inks Corporation is the first step towards MICRO'S vision of leaving behind an

impression of being the most dynamic inks company in the world.

Here the Company's core strategy is to offer better value to its customers on the price quality

matrix and participating in their programs to deliver better value to the customers' customer. At

MICRO they starve for having customers' delight and not only customers' satisfaction.

To make this strategy a success, the Company has stepped up its R&D efforts in order to develop

superior products. On a parallel front, Micro Inks has developed technology for backward

integration into flushed colours, pigments, resins and additives - the key raw materials for inks.

By doing so, MICRO is today the only company in the world to be self sufficient in all the

critical raw materials of Printing Inks.

The next thing on its agenda was to accelerate its inks manufacturing capacities to keep pace

with the global demand. This was done with by MICRO with the setting up of one of the world's

largest ink manufacturing facilities at a single location, in India.

This plant at Silvassa has a world-size capacity of 60,000 metric tonnes. Here MICRO

manufactures a wide range of inks with innovative and unique process technologies that have

never been attempted before in the industry. Apart from this, another world size plant has been

set up at Vapi, which produces a wide range of flushed colours, pigments and resins in a single-

stream plant for 'seamless' manufacturing of inks.

Finally, all this is to be backed by the best of technical support and customer service. All

translating ultimately into one fact, MICRO is poised to make an indelible mark on the world.



MICRO INKS LIMITED

9 | P a g e

Executive summary

Today the significance of project work has greater importance in business world. Practical

knowledge is as important as theory so that one thing is said, ³Practice makes a men Perfect ³

I have made the project in MICROINKS LTD in manufacturing ink . I have made the report

depicting the companies working mechanism and the overview of its entire department. The

companies mainly comprises of following department:

y Production Department

y Marketing Department

y Human Resource Department

y Finance/Accounts Department

y In the preview of Production department the process has been studied separately for

solution, mixing, dying, and packing of the company. In order to understand the

mechanism of Finance/Accounts Department I took all relevant information of the

functional field. In marketing department they used direct selling at zero level

distribution they has 30% export business in major countries like USA,GERMANY,etc.

y As a part of the project report a special topic was selected for studying and Comparing

the Finance/Accounts Department functions of various organizations at Vapi.. I have

analyzed and interpreted the different Accounts functions of various organizations and

depicted their similarities and differences.



MICRO INKS LIMITED

10 | P a g e

Economy Analysis:

Economies across the world are witnessing a series of changes that are unprecedented in

scale and extent of their impact. India had begun the fiscal year on buoyant note, as it continued

on its phase of amazing growth. The initial market parameters were encouraging and once again

reflected the multi-faceted and multi dimensional strengths of our economy. However, as the

year unfolded, the global markets were subject to developments such as volatility in prices of

commodities and crude oil, inflationary pressures and the sub-prime crisis in the US. This

resulted in tight liquidity conditions in the market. Over the last couple of months, an economic

slowdown has enveloped the whole world and certainly, India has been impacted. Consequently,

the markets have witnessed a moderation in growth.

Against this backdrop, Micro Inks Limited was able to optimally stand up to the varied

challenges and developments on its growth path.

The global printing ink industry, due to economic conditions in some parts of the world

and due to increasing cost pressures, both on manufacturing as well as on the raw materials, had

remained under pressure.

Ink industry in India grew by nearly 8% during the year in volume terms and about 18%

in value terms.



MICRO INKS LIMITED

11 | P a g e

Industry Analysis:

Micro Inks Ltd (MICRO) is a part of US $ 239 million Bilakhia

group, which has diverse interests in printing inks, resins,

flushed pigments and crop protection chemicals. Today, through

the years of growth, MICRO has transformed itself into a multi-

dimensional, multi-national company offering a comprehensive

range of quality products, efficient customer service and a wide

distribution network.

MICRO is the undisputed market leader in the country commanding a market share of 30%+ in

the US $ 200 million domestic inks industry. In the process, it also created an enviable track

record of one of the fastest growing company and took its annual sales figures galloping from a

mere US $ 5 million in 1993 - 94 to an astonishing increase to US $ 146 million. The meteoric

ascent of MICRO to the position of a market leader was primarily the result of the efforts of the

people at the helm of affairs - The Bilakhia Group.

Through the years of growth, MICRO has transformed itself into a multi-dimensional, multi-

location company offering a comprehensive range of quality products, efficient customer service

and a wide distribution network. In India, It is a marketing powerhouse with12 branches,

5

technical centers and around 500 distributors. Today, MICRO has spread its wings globally with

a distribution network in more than 50+ countries.

MICRO is also the only Printing Inks Company in India, and amongst two or three companies in

the world, to have successfully implemented SAP / R3 solution, integrating its marketing offices

through satellite links. Together all the elements will work as a single force to offer value to its

customers.

Today the company with a modest beginning has grown and consolidated its strengths, skills and

people to achieve a unique enterprise. One which is on its way to becoming a major player in the

global market. A reality, which it achieved through a well thought out and executed business

strategy.



MICRO INKS LIMITED

12 | P a g e

Setting up operations in the world's most highly competitive ink market, USA with a company

called Micro Inks Corporation is the first step towards MICRO'S vision of leaving behind an

impression of being the most dynamic inks company in the world.

Here the Company's core strategy is to offer better value to its customers on the price quality

matrix and participating in their programs to deliver better value to the customers' customer. At

MICRO they starve for having customers' delight and not only customers' satisfaction.

To make this strategy a success, the Company has stepped up its R&D efforts in order to develop

superior products. On a parallel front, Micro Inks has developed technology for backward

integration into flushed colours, pigments, resins and additives - the key raw materials for inks.

By doing so, MICRO is today the only company in the world to be self sufficient in all the

critical raw materials of Printing Inks.

The next thing on its agenda was to accelerate its inks manufacturing capacities to keep pace

with the global demand. This was done with by MICRO with the setting up of one of the world's

largest ink manufacturing facilities at a single location, in India.

This plant at Silvassa has a world-size capacity of 60,000 metric tonnes. Here MICRO

manufactures a wide range of inks with innovative and unique process technologies that have

never been attempted before in the industry. Apart from this, another world size plant has been

set up at Vapi, which produces a wide range of flushed colours, pigments and resins in a single-

stream plant for 'seamless' manufacturing of inks.

Finally, all this is to be backed by the best of technical support and customer service. All

translating ultimately into one fact, MICRO is poised to make an indelible mark on the world.



MICRO INKS LIMITED

13 | P a g e

SWOT Analysis

SWOT analysis is one of the important tasks of every company. L & T follows the rule of

emphasizing on others strengths, eliminating their weakness, seize the best opportunities and

counter the threats.

Strengths:

Right products, quality and reliability.

Superior product performance vs. competitors.

Brand image

High degree of customer satisfaction.

Dedicated workforce aiming at making a long-term career in the field.

Lower response time with effective service.

Products have required accreditations.

Opportunities:

Profit margins will be good. End-users respond to new ideas.

Could extend to overseas broadly.

New specialist application.

Could seek better supplier deals.

Fast-track career development opportunities on an industry-wide basis.

An applied research to create to new create opportunities for developing techniques.

Weakness:

Some gaps in range for certain sectors.

Not very popular in the international market.

Delivery staff needs training.



MICRO INKS LIMITED

14 | P a g e

Processes, systems, etc«

Management cover insufficient.

Sectored growth is constrained by low unemployment levels and competition for staff.

Threats:

Legislation could impact.

Existing core business distribution risk.

Vulnerable to reactive attack by major competitors.

Lack of infrastructure in rural areas could constrain investments.

High volume/low cost market is intensely competitive.



MICRO INKS LIMITED

16 | P a g e

(2) Inventory turnover Ratio:

Meaning: This ratio establishes a relationship between costs of goods sold and average

inventory (average stock). The objective of computing this ratio is to determine the efficiency

with which the inventory is utilized.

Formula: Inventory turnover Ratio= Cost of goods sold/ Average Inventory.

Table: 5.2

Particulars 2007 2008 2009

COGS 10167.03 11236.09 11659.02

Avg.Inventory 2073.92 2078.635 2045.075

I.T ratio 4.90 5.41 5.70

Chart: 5.2

Interpretation: This ratio is important to know the speed of turnover of inventory in

manufacturing firm. It can be said that the inventory is used efficiently, if the ratio is high more

investment is made in inventory and therefore measures should be taken to decrease inventory.

Here, it has been increased in all the year.

4.9

5.415.7

4.5

5

5.5

6

2007 2008 2009

Inventory turnover ratio

Inventory turnover ratio



MICRO INKS LIMITED

17 | P a g e

(3) Debtors Turnover Ratio:

Meaning: This ratio establishes a relationship between net credit sales and average trade debtors.

The objective of calculating this ratio is to determine an efficiency with which the trades debtors

are manage.

Formula: Debtors Turnover Ratio=Net credit sales/ Average debtors.

Table: 5.3


Net credit sales 12292.65 13428.01 13804.84

Average debtors 3247.3 3761.05 3317.63

Debt t/o ratio (Times) 3.79 3.57 4.16

Chart: 5.3

Interpretation: This ratio measures how rapidly receivables are collected. A high ratio is

indicative of shorter time-lag between credit sales and cash collection. A low ratio shows that

debts are not being collected rapidly. In 2008 the ratio was low which shows ineffective

collection policy. But in 2009 the ratio goes high. This shows the company¶s collection policy is

effective.

3.79

3.57

4.16

3.2

3.4

3.6

3.8

4

4.2

4.4

2007 2008 2009

Debtors turn over rario

Debtors turn over rario



MICRO INKS LIMITED

18 | P a g e

(4) Fixed assets turnover Ratio:

Meaning: This ratio measures a relationship between net sales and fixed assets of the firm. The

objective of calculating this ratio is to point out the efficiency of the firm in the use of fixed

assets.

Formula: Fixed assets turnover Ratio=Sales / Average fixed assets.

Table: 5.4


Sales 12292.65 13428.01 13804.84

Avg.fixed assets 3571.87 3541.80 3347.36

Ratio 3.44 3.79 4.12

Chart: 5.4

Interpretation: The Ratio shows a increasing in 2009 compare with 2008. It is good for the

company and again in 2010 increase. It shows higher efficiency and upward position of the

company.

3.44

3.79

4.12

3

3.2

3.4

3.6

3.8

4

4.2

2007 2008 2009

Fixed assets t/o ratio

Fixed assets t/o ratio



MICRO INKS LIMITED

19 | P a g e

(5) Gross profit Ratio:

Meaning: This ratio measures the relationship between gross profit & net sales. The main

objective of computing this ratio is to determine the efficiency with which production and/or

purchase operations are carried on.

Formula: Gross profit Ratio= Gross profit/ Net sales*100.

Table: 5.5 (Rs.in million)


Gross profit 2125.62 2191.92 2145.82

Net sales 12292.65 13428.01 13804.84

GP Ratio (%) 17.29 16.32 15.54

Chart: 5.5

Interpretation: This ratio measures the percentage of each sales rupee remaining after the firms

has paid for its goods. A high ratio of gross profit to sales is a sign of good management as it

implies that the cost of production of the firm is relatively low. It may also be indicative of

higher sales price without a corresponding increase in the cost of goods sold. Here, it has been

increasing during three years.

17.29

16.32

15.54

14.5

15

15.5

16

16.5

17

17.5

2007 2008 2009

G.P RATIO

G.P RATIO



MICRO INKS LIMITED

20 | P a g e

(6) Net profit Ratio:

Meaning: This ratio measures the relationship between net profit and net sales. The main

objective of computing this ratio is to determine the overfull profitability due to various factors

such as operational efficiency trading on equity.

Formula: Net profit Ratio= Profit after tax (PAT)/Net sales*100.

Table: 5.6


PAT 681.17 902.95 1125.49

Net sales 12292.65 13428.01 13804.84

NP Ratio (%) 5.54 6.72 8.15

Chart: 5.6

Interpretation: This ratio indicates an average net margin earned on sales. A high net profit

margin would ensure adequate return to the owners as well as enable a firm to withstand adverse

economic conditions when selling price is declining, Here, it has been increased during three

years with the margin gap of 1.56 to 1.57.

5.546.73

8.15

0

1

2

3

4

5

6

7

8

9

2007 2008 2009

net profit ratio

net profit ratio



MICRO INKS LIMITED

21 | P a g e

(7) Book value per share Ratio:

Meaning: It shows value per share.

Formula: Price to book value Ratio=Net worth/Number of equity shares.

Table: 5.7


Net worth 10836.58 8053.47 7171.36

No. of eq. shares 24.87 24.87 24.87

Book value per shareRatio

435.72 323.82 288.35

Chart: 5.7

Interpretation:

Book value per share is decreasing per year it gradually decreasing from last three years it is nogood for the company thus the net worth of the company is decreasing all the year as compare to

previous year as compare to number of equity shares.

435.72

323.82288.35

0

50

100

150

200

250

300

350

400

450

500

2007 2008 2009

Book value per share

Book value per share



MICRO INKS LIMITED

22 | P a g e

(8) Earnings per share Ratio:

Meaning: It shows return or income per share, whether or not disturbed as dividends

Formula: Earnings per share Ratio=Net profit to equity share holders/No.of shares.

Table: 5.8


Net profit to equity 1510.6 1988.86 2689.76

No.of eq.shares 24.87 24.87 24.87

Earnings per shareratio (%)

60.74 79.95 108.15

Chart: 5.8

Interpretation:

y It has drastically increased in comparison of last year.

y Equity shareholders are satisfied at this stage as they are getting more return in

comparison of last year.

y Share holder get more satisfied as net profit equity increase all the year compare to

previous year.

60.74

79.95

108.15

0

20

40

60

80

100

120

2007 2008 2009

Earning per share

Earning per share



MICRO INKS LIMITED

23 | P a g e

(9) Dividend per share Ratio:

Meaning: It gives the amount which is paid on one share to their share holder.

Formula: Dividend per share Ratio=Dividend paid to equity shareholders/No.of equity shares

outstanding.

Table: 5.9


Dividend 149.23 149.23 149.23

No.of shares 24.87 24.87 24.87

Div./share ratio 6 6 6

Chart: 5.9

Interpretation:

y Dividend per share is same for the company from last three years as dividend and no of

shares remain same form all the three years.

6 6 6

0

1

2

3

4

5

6

7

2007 2008 2009

Div per share

Div per share



MICRO INKS LIMITED

24 | P a g e

(10) Debt-equity Ratio:

Meaning: The relationship between borrowed funds and owner¶s funds and owner¶s capital is a

popular measure of the long term financial solvency of a firm. This relationship shown by the

debt-equity ratio only.

Formula: Debt-equity Ratio=Long term debt/Shareholder¶s equity.

Table: 5.10 (Rs.in million)


Long term debt 3117.84 3427.90 1594.89

Shareholder¶s eq. 7718.74 4625.57 5576.47

Debt-equity Ratio(Times)

0.4 0.74 0.29

Chart: 5.10

Interpretation:

y Debt equity ratio has decrease as compare to previous year

y It is good for the company as they have to pay less.

y This happens as long term debt is decreasing compare to previous years.

0.4

0.74

0.29

0

0.1

0.2

0.3

0.4

0.50.6

0.7

0.8

2007 2008 2009

Debt equity ratio

Debt equity ratio



MICRO INKS LIMITED

25 | P a g e

(11) Asset turnover ratio:

Meaning: This is a measure of how well assets are being used to produce revenue total asset

turnover. It shows ability to generate sales per rupee of assets.

Formula: total sales/total assets

Table: 5.11 (Rs. in million)


Total assets 13498.93 10561.61 10234.62

Total sales 12292.65 13428.01 13804.84

Assets turnover ratio(times) 0.91 1.27 1.35

Chart: 5.11

Interpretation:

y It shows increasing trend and it indicates that more sales is generated from last year y It is good for the company and company should try to utilize its assets to maximize the

sales for the next year also.

0.91

1.27 1.35

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2007 2008 2009

Assets turnover ratio

Assets turnover ratio



MICRO INKS LIMITED

26 | P a g e

(12) Proprietary Ratio: It shows extent of owner¶s funds utilized in financing assets.

Formula: Proprietary Ratio = Profit after tax / total assets * 100

Table 5.12 (millio


Total assets 13498.93 10561.61 10234.62

PAT 681.17 902.85 1125.49

Proprietary Ratio 5.05 8.55 11

Chart 5.12

Interpretation:

y It shows that portion of the proprietary fund in total asset.

y Higher the proprietary ratio, higher the control of the proprietors on company.

y Shareholders¶ control and interference shall be very less.

y In current case, company is in good position as the proprietary ration has increased

compared to previous year.

5.05

8.55

11

0

2

4

6

8

10

12

2007 2008 2009

proprietary ratio

proprietary ratio



MICRO INKS LIMITED

27 | P a g e

(13) Cash reserve ratio:It shows the owners fund compare with cash and current liabilities.

Formula: Cash reserve ratio = Cash or Bank / Current Liabilities

Table 5.13


Cash/Bank 144.22 71.19 104.68

CL 2275.15 2134.74 2698.68

Cash reserve ratio 0.063 0.033 0.038

Chart 5.13

Interpretation

y Cash reserve ratio is less compare to 2007 but more than 2008.

y Cash reserve is more is good for the company.

0.063

0.0330.038

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

2007 2008 2009

cash reserve ratio

cash reserve ratio



MICRO INKS LIMITED

28 | P a g e

(14) Quick Ratio: The term quick assets ratio which can be converted into cash immediately or

at a short notice without diminution of value.

Formula: Quick Ratio = Current Assets-stock / current liabilities

Table 5.14 (millio


Current Assets-stock 3987.12 2765.26 3932.59

CL 2275.15 2134.74 2698.68

Quick Ratio 1.75 1.30 1.46

Chart 5.14

Interpretation:

y This interpretation of the liquidity position of the firm needs modification in the light of

the quick ratio.

y Quick ratio of 1:1 is considered satisfactory as the firm can easily meet all current claims.

y Current assets and current liabilities both are increasing compare to last years.

1.75

1.31.46

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2007 2008 2009

quick ratio

quick ratio



MICRO INKS LIMITED

29 | P a g e

(15) Return on capital equity: Measures the return on the total equity funds of ordinary

shareholders

Formula: Return on capital equity = Profit after tax / capital equity * 100

Table 5.15 (million)


PAT 681.17 902.85 1125.49

CE 10836.58 8053.47 7171.36

Return on capital equity 6.29 11.30 15.69

Chart 5.15

Interpretation:

y Comparing with the previous years return on eq. is increasing.

y It is good for the company as profit after tax is increasing

y ROE increase due to increase in profit as capital equity decreasing gradually compare to

last three years.

6.29

11.3

15.69

0

2

4

6

8

10

12

14

16

18

2007 2008 2009

Return on cap eq.

Return on cap eq.



MICRO INKS LIMITED

30 | P a g e

Balance Sheet (Common-size as at Dec 31)

(Year 2007, 2008 and year 2009.)

Meaning: A common size 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. As we can see here the share capital

of the company decreases.

Balance sheet 5.2)

Amt.(million.) % 2009 2008 2007 2009 2008 2007

Share Capital 248.72 248.72 248.72 3.30 2.95 2.22

Reserve & Surplus 5,327.75 4,376.85 7,470.02 70.70 51.94 66.56

secured Loan 1,194.89 2,638.06 2,410.14 15.86 31.31 21.47

Unsecured Loan 400 789.84 707.7 5.31 9.37 6.31

Deferred tax liability 364.58 373.4 387.2 4.84 4.43 3.45

Total 7535.94 8426.87 11223.78 100 100 100

Fixed Assets 3,103.17 3,382.94 3,380.00 39.1225 38.8458 29.54574

Investment 971.19 493.5 3,889.34 12.2441 5.6668 34.00

exploratory work in progress 244.19 158.86 191.87 3.0786 1.8242 1.6772

CA 5,916.07 6,526.31 6,037.72

CL 2,698.68 2,134.74 2,275.15

CA-CL 3217.39 4391.57 3762.57 40.5625 50.4277 32.89

Miss. Exp. 395.99 281.77 216.11 5 3.235522 1.889092

Total 7931.93 8708.64 11439.89 100 100 100



MICRO INKS LIMITED

31 | P a g e

Interpretation:

y In 2009 the secured loan is more less as compare to the previous year. The secured loan

in 2007, 2008 and 2009 respectively 15.86%, 31.31% 21.47% proportion of total

liabilities.

y The unsecured loan is decrease in 2009 than previous year but more than the preceding to

previous year.

y Because of it is decrease their interest rate by increase secured loan in place of unsecured

loan.

y The fixed asset is increase in 2009 than both previous year but the proportion part is

decrease than 2007

y The investment is also increase than previous year.

y The net current asset is decrease in 2009 than previous year.



MICRO INKS LIMITED

32 | P a g e

Common size of profit and loss account

P & L A/c

Amt.(million.) % 2009 2008 2007 2009 2008 2007

Income

Sales 13,764.81 13,382.78 11,488.01 99.71 99.66 99.67

Other Income 40.03 45.23 38.56 0.29 0.34 0.33

TOTAL 13804.84 13428.01 11526.57 100 100 100

Expense

Materials Consumed 9,076.68 8,674.88 7,949.96 65.75 64.60 68.97

Mfg and Other Exps 2,675.00 2,423.98 2,269.13 19.38 18.05 19.69

Finished Good Stock -92.66 137.23 -52.06 -0.67 1.02 -0.45

dep. 485.67 319.54 310.26 3.52 2.38 2.69

Interest 160.67 761.68 204.31 1.16 5.67 1.77

TOTAL 12305.36 12317.31 10681.6 89.13801 91.72848 92.66937

PBT 1,499.48 1,110.70 824.04 10.86 8.27 7.33

TAX 373.99 207.85 142.87 2.71 1.55 1.24

PAT 1125.49 902.85 681.17 8.152865 6.723632 6.091144

TOTAL 13804.84 13428.01 11505.64 100 100 100

Interpretation

y Considering the sales as base, percentage of all the incomes and expenses are calculated.

y Thus I derive increase or decrease in the profit or loss in comparison of previous year.

y In the above table I can see that profit percentage has increased from 6.72% to 8.15%.

y It shows the good position of the company that profit is increased and it is because that the

sales have increased.



MICRO INKS LIMITED

33 | P a g e

DU POND ANALYSIS

y Meaning: Du Pont analysis of the company is an important factor for analysis of the return

on assets, capital and equity, which are the main indicators of company profitability, stability

and rewards to investor.

y It is necessary and helpful to analyze the company in which an investor is going to invest

his/her money. The usefulness of the integrated analysis lies in the fact that it presents the

overall picture of the performance of a firm as also enables the management to identify the

factors which have a bearing on profitability.

Du Pont of ROE(5.3)

Particular 2009 2008 2007

EAT 433.33 373.56 316.59

EBT 527.03 425 365.18

EAT/EBT (Times) 0.822 0.879 0.867

EBT 527.03 425 365.18

EBIT 521.43 411.66 356.63EBT/EBIT (Times) 1.011 1.032 1.024

EBIT 521.43 411.66 356.63

Sales 2856.87 2396.16 2083.4

Net Profit Ratio (%) 18.252 17.180 17.118

Sales 2856.87 2396.16 2083.4

Assets 871.3 886.52 572.94

Assets turnover (times) 3.278859 2.702883 3.636332

Assets 871.3 886.52 572.94Equity 8676 8651 8640

Financial Leverage (times) 0.10 0.10 0.07

Return on Equity 4.995 4.318 3.664



MICRO INKS LIMITED

34 | P a g e

Interpretation

y EAT/EBT shows increase in comparison of last year. So it is good for the company.

Company should try to maximize it in following years.

y EBT/EBIT has decreased It implies that company is less paying interest to the debenture

holders.

y Net profit ratio has increased from 17% to 19% it shows higher sales and loIr cost of the

company.

y Assets turnover ratio gives an idea about the proportion of sales is increased by

optimizing the use of the assets.

y Financial leverage has same from 2 years.



MICRO INKS LIMITED

35 | P a g e

Trend analysis

The significance of a trend analysis of ratios lies in the fact that the analysis can know the

direction of movement, that is, whether the movement is favorable or unfavourable. Trend

analysis involves comparison of a firm over a period of time, that is present ratios are compared

with past ratios for the same firm. It indicates the direction of change in the performance-

improvement, deterioration or constancy- over the years.

Balance sheet

Amt.(million.) %

2009 2008 2007 2009 2008 2007

Share Capital 248.72 248.72 248.72 3.30 2.95 2.22

Reserve & Surplus 5,327.75 4,376.85 7,470.02 70.70 51.94 66.56

secured Loan 1,194.89 2,638.06 2,410.14 15.86 31.31 21.47

Unsecured Loan 400 789.84 707.7 5.31 9.37 6.31

Deferred tax liability 364.58 373.4 387.2 4.84 4.43 3.45

Total 7535.94 8426.87 11223.78 100 100 100

Fixed Assets 3,103.17 3,382.94 3,380.00 39.1225 38.8458 29.54574

Investment 971.19 493.5 3,889.34 12.2441 5.6668 34.00

exploratory work in progress 244.19 158.86 191.87 3.0786 1.8242 1.6772

CA 5,916.07 6,526.31 6,037.72

CL 2,698.68 2,134.74 2,275.15

CA-CL 3217.39 4391.57 3762.57 40.5625 50.4277 32.89

Miss. Exp. 395.99 281.77 216.11 5 3.235522 1.889092

Total 7931.93 8708.64 11439.89 100 100 100



MICRO INKS LIMITED

36 | P a g e

Interpretation

y Considering the year 2007 as a base year, I have calculated trend of the following years

for balance sheet

y I can see above that the trend is continuously increasing.

y It indicates sound position of the company.



MICRO INKS LIMITED

37 | P a g e

P & L A/c

Amt.(million.) %

2009 2008 2007 2009 2008 2007

Income

Sales 13,764.81 13,382.78 11,488.01 99.71 99.66 99.67

Other Income 40.03 45.23 38.56 0.29 0.34 0.33

TOTAL 13804.84 13428.01 11526.57 100 100 100

Expense

Materials Consumed 9,076.68 8,674.88 7,949.96 65.75 64.60 68.97

Mfg and Other Exps 2,675.00 2,423.98 2,269.13 19.38 18.05 19.69

Finished Good Stock -92.66 137.23 -52.06 -0.67 1.02 -0.45

dep. 485.67 319.54 310.26 3.52 2.38 2.69

Interest 160.67 761.68 204.31 1.16 5.67 1.77

TOTAL 12305.36 12317.31 10681.6 89.13801 91.72848 92.66937

PBT 1,499.48 1,110.70 824.04 10.86 8.27 7.33

TAX 373.99 207.85 142.87 2.71 1.55 1.24

PAT 1125.49 902.85 681.17 8.152865 6.723632 6.091144

TOTAL 13804.84 13428.01 11505.64 100 100 100

Interpretation

y Considering the year 2007-08 as a base year, I have calculated trend of the following

years for income-size statement

y I can see above that the trend is continuously fluctuating

y It indicates sound position of the company.



MICRO INKS LIMITED

38 | P a g e

DIRECTOR REPORT

Financial Highlights: (Rs. in Million)

31/12/2009 31/12/2008

Sales/Income From Operations

Domestic (Net)-Including Other Operating Income 6,857.34 6,199.47

Export 6,907.47 7,183.31

PBDIT 2,145.82 2,191.92

Provision for Taxation (Including FBT) 382.81 221.65

Deferred Tax Credit (8.82) (13.80)PAT 1,125.49 902.85

Balance Brought Forward 1,564.27 1,086.01

Profits Available for Appropriation 2,689.761,988.86

Appropriations

Proposed Equity Dividend 149.23 149.23

Tax on Proposed Equity Dividend 25.36 25.36

Transfer to General Reserve 500.00 250.00

Surplus Carried to Balance Sheet 2,015.17 1,564.27

Dividend:

The Board of Directors has recommended dividend of Rs. 6/- per share, [Previous year (@60%)],

on 24871941 Equity Shares of Rs. 10/- each fully paid-up, aggregating to Rs. 174.59 million

including Dividend Distribution Tax of Rs. 25.36 million. The dividend for the accounting year

ended December 31, 2009 will not be taxable in the hands of the Members.



MICRO INKS LIMITED

40 | P a g e

Recommendation

y MICRO is the undisputed market leader in the country commanding a market share of 30%+ in the US $ 200 million domestic inks industry.

y MICRO has transformed itself into a multi-dimensional, multi- location company

offering a comprehensive range of quality products, efficient customer service and a wide

distribution network. In India

y Consolidated Net Sales grew only by 0.1%, due to global recession and led by 11%

growth in domestic market but 16% (in dollar terms) decline in US market, 3% decline in

Rest of the World market (excludingUSA and India) and 6% decline in revenue

y EBIT margins are expected to remain flat or dip from current levels. Micro inks has a

strong deal pipeline which will help drive growth in H2FY11.

y I maintain buy recommendation with a price target of Rs 500,"

y As MICRO INKS LTD is a Listed and Ill organized company

y EPS of the company is 108.15 and ROE of company is 15.69

y It shows the good position of the company. Thus, prospective investors are recommended

to invest their funds in the company.



MICRO INKS LIMITED

41 | P a g e

Conclusion

By making this project I got a very good experience from the project and now I am able to make

the financial analysis of any company and I m happy to make this project. By making this project

i came to know the idea of the actual financial condition of the company.



MICRO INKS LIMITED

Bibliography

M Y Khan, P K Jain Management Accounting ( Fifth Addition) (2010), Tata McGraw Hill

Education Private Limited.

For history of the company of micro inks ltd expected from www.microinks.com

For Final report 2007, 2008, 2009 expected from www.microinks.com

For economic & industrial analysis expected from www.winkepedia.com

Other sources from www.moneycontrol.com

microinks accounts project

Documents