A Project Reporton FINANCIAL STATEMENT ANALYSIS OF MRF LTDIn partial fulfillment of the requirement of the Award for the Degree ofMaster of Business Administration

Submitted to:

Gandhinagar Institute of Technology(A Centre for Management Studies)(An ISO 9001:2008 Certified)(AICTE approved & Affiliated to Gujarat Technological University)

Prepared by:Name: Rushang PatelEnrollment No. 127150592031

Under the Guidance ofProf. Milan S. Shah Year- 2012-2013

DeclarationI, PATEL RUSHANG AMARISHBHAI, hereby declare that the Project Report entitled FINANCIAL STATEMENT ANALYSIS OF MRF.is a result of our own work based on secondary data collected by us and our indebtedness to other work publications, references, if any, have been duly acknowledged.

Place: MotibhoyanDate: 4TH DECEMBER, 2012(SIGNATURE)PATEL RUSHANG A. En. No.: 127150592031

Certificate

It is certified that the work presented in this report entitled FINANCIAL STATEMENT ANALYSIS OF MRF has been carried out for partial fulfillment of curriculum for the degree of Master of Business Administration.I further certified that this report has not been submitted elsewhere for a degree. The Information obtained from various sources to present the report has been summarized and acknowledged.PATEL RUSHANG A. En. No.: 127150592031

Counter signed by

Milan S. Shah HOD, MBA, GIT

Gandhinagar Institute of Technology(A Centre for Engineering & Management Studies)Gujarat Technological UniversityAhmedabad4th DECEMBER 2013

Preface

As an aspirant of MBA, it is of utmost importance to gain practical exposure to the external environment along with the theoretical knowledge. It facilitates better understanding of the theoretical concepts and implications of the same.The subject of Accounting for Managers (AFM) - 2810001, therefore, includes preparation of a project report on the financial statement analysis of a company applying a practical perspective apart from the academics. In competitive corporate world it is very essential for any company to continuously evaluate its performance with the help of financial statements. It is here that the role of financial statement analysis becomes important. The prime object of companys financial reporting is to help its various stakeholders such as present and potential investors, creditors, financial institutions and others in making rational investment, credit and other decisions. Effective decision-making requires accurate evaluation of past performance as well as financial position and assessment of future performance. The purpose of such an analysis is to assess a companys financial health.Financial statement analysis is of different significance to a variety of persons and institutions. Keeping in mind the need of all the concerning parties an attempt has been made to understand, analyze and interpret the past two years financial statements of MRF Limited. The report also includes tables and graphs wherever necessary.

PATEL RUSHANG A En. No.: 127150592031

Acknowledgements

It gives me immeasurable pleasure, to acknowledge the help and advice given by all the concern people.

It is matter of great pleasure for me to get this opportunity of expressing my/our deep and sincere of gratitude to all the faculty members of the Gandhinagar Institute of Technology (Center for Management Studies) for their guidance & generous support that gave me sufficient strength to prepare this project report.

I am grateful to Milan S. Shah (HOD-MBA) for help and inspiring guidance without which I would not have successfully completed this report.

We also convey our sincere thanks to other employees of the company & staff of the college who have directly or indirectly helped us in getting the required information for preparation of this project report.

Place: MotibhoyanDate: 4TH DECEMBER 2012PATEL RUSHANG AEn. No.: 127150592031

Table of Contents Title page1 Declaration2 Certificate3 Preface 4Acknowledgements 5Companys background7 Companys structure...10 P&l Analysis11 Balance sheet Analysis..13 Ratio Analysis.16 Bibliography...25

COMPANYS BACK GROUND

HISTORY : 1946 1966

A young entrepreneur, K. M. Mammen Mappillai, opened a small toy balloon manufacturing unit in a shed at Tiruvottiyur, Madras (now Chennai). MRF ventured into the manufacture of tread rubber. And with that, the first machine, a rubber mill, was installed at the factory. This step into tread-rubber manufacture was later to catapult MRF into a league that few had imagined possible. The quality of the product manufactured was of such a high standard that by the close of 1956, MRF had become the market leader with a 50% share of the tread-rubber market in India. So effective was MRF's hold on the market, that the large multinationals had no other option but to gradually withdraw from the tread rubber business in India. With the success achieved in tread rubber, MRF entered into the manufacture of tyres. MRF established a technical collaboration with the Mansfield Tire & Rubber Company of USA. Around the same time, it also became a public company On June 12, 1963, India's first Prime Minister, Late Pandit Jawaharlal Nehru laid the foundation stone for the Rubber

Contd

Research Centre at Tiruvottiyur to commemorate the inauguration of the Tiruvottiyur factory.

HISTORY : 1967 1986

MRF became the first Indian company to export tyres to USA - the very birthplace of tyre technology

MRF inaugurates its Kottayam unit

MRF entered into a technical collaboration with the B.F. Goodrich Tyre Company of USA, which was involved with the development of tyres for the NASA space-shuttle. With this began a significant exercise in quality improvement and new product development.

MRF tyres were the first tyres selected for fitment onto the Maruti Suzuki 800 - India's first small, modern car.

Contd

HISTORY : 1987 2008

The MRF Pace Foundation was set up, with international pace bowler, Dennis Lillee as its Director. Not long thereafter, pace bowlers trained at the Foundation were selected for the Indian Cricket Team.

The MRF Nylogrip Zapper for two-wheelers is launched

MRF launches the Super Lug 505 - A premium mileage, rear fitment truck tyre for national highway operations on rated roads.

MRF Ltd | HISTORY : 1967 198627

STRUCTUREMadras Rubber Factory

TypePublic

Founded1946

Founder(s)K.M.Mammen Mappillai

HeadquartersChennai,India

Key peopleArun Mammen (MD)

ProductsTyres,Toys,SportsGoods,Conveyor belt,Paints& Coats

Revenue10,670crore(US$1.94 billion)(2011)

Operating income893crore(US$162.53 million)(2011)

Net income619crore(US$112.66 million)(2011)

SubsidiariesFunskool, MRF Pace Foundation, MRF Racing

Websitewww.mrftyres.com

PROFIT AND LOSS ACCOUNT

Sep ' 12(Rs crore)Sep ' 11(Rs crore)

Income

Operating income11,850.689,716.54

Expenses

Material consumed8,553.267,283.46

Manufacturing expenses668.98570.57

Personnel expenses513.69446.75

Selling expenses-465.30

Adminstrative expenses853.75136.72

Expenses capitalized--

Cost of sales10,589.688,902.80

Operating profit1,261.00813.74

Other recurring income32.0114.10

Adjusted PBDIT1,293.01827.84

Financial expenses158.7893.02

Depreciation301.11247.63

Other write offs--

Adjusted PBT833.12487.19

Tax charges260.86274.90

Adjusted PAT572.26212.29

Non recurring items-2.23

Other non cash adjustments0.10404.90

Reported net profit572.36619.42

Earnigs before appropriation572.36619.42

Equity dividend10.6010.60

Preference dividend--

Dividend tax1.731.73

Retained earnings560.03607.09

ANALYSIS From the above profit and loss accounts. we can say that company is earning in good amount

In the year 2012 the companies total income is high as compared to the year 2011.

The income increased by 2134.14crore in year 2012 as compared to 2011.

Even the expense was also the high as compared to the year 2011.

BALANCE SHEETSep ' 12(Rs crore)Sep ' 11(Rs crore)

Sources of funds

Owner's fund

Equity share capital4.244.24

Share application money--

Preference share capital--

Reserves & surplus2,853.562,293.53

Loan funds

Secured loans1,433.341,209.30

Unsecured loans198.09306.96

Total4,489.233,814.03

Uses of funds

Fixed assets

Gross block5,062.513,831.82

Less : revaluation reserve--

Less : accumulated depreciation2,148.711,860.44

Net block2,913.801,971.38

Capital work-in-progress414.651,135.25

Investments424.7172.69

Net current assets

Current assets, loans & advances3,459.113,160.49

Less : current liabilities & provisions2,723.042,525.78

Total net current assets736.07634.71

Miscellaneous expenses not written--

Total4,489.233,814.03

Notes:

Book value of unquoted investments424.6277.49

Market value of quoted investments2.832.35

Contingent liabilities404.11551.10

Number of equity sharesoutstanding (Lacs)42.4142.41

ANALYSIS

According to the balance sheet for the year 2011-2012 the liabilities has increased by 197.26crores.

In the asset also the companys profit was good so asset also increased and even in fixed deposit also company earns deposit in year 2012.

RATIO ANALYSIS

Ratio Analysis involves establishing financial relationship between components of financial statements Ratios can be classified into the following categories:

i. Profitability Ratiosii. Liquidity Ratiosiii. Solvency Ratios

PROFITABILITY RATIOS

1. Profit Margin Ratio/ Net Profit Ratio/ Return on Sales Ratio: 2011 5.82 % 2012 8.09 %

The profit of the company has been increased as compared to last year.

2. Assets Turnover Ratio:

2011 2.55 2012 2.85

The company has more assets than it really needs for its operations last year.

3. Return on Net Worth: 2011 26.95 % 2012 20.02 %

The net profit earned on the equity shareholders funds is low as compared to last year.

4. Earning Per Share: 2011 97.32 Rs 2012 98.59 Rs

The overall profitability in terms of per share of capital contributed by owners is high as compared to last year.

LIQUIDITY RATIOS1. Current Ratio: 2011 0.91 2012 1.47

The companys current ratio is higher than the ideal ratio 1.33:1 in the year 2012.

2. Quick Ratio: 2011 0.64 2012 0.66

The companys quick ratio is higher than the ideal ratio 1:1 in the last year.

SOLVENCY RATIOS

1. Debt-Equity Ratio: 20110.48 20120.38

The debt-equity ratio is lower than the ideal ratio 1.5:1 in the year 2012

2. Interest Coverage Ratio: 2011 105.39 2012 126.04

The interest coverage ratio is very high in the last year.

Bibliography

WWW.WIKIPEDIA.COM

WWW.MONEYCONTROL.COM

WWW.MONEYREDDIF.COM

WWW.GOOGLE.COM

WWW.BSEINDIA.COM

WWW.MRFINDIA.COM