nirma ltd

Click here to load reader

Post on 28-Jan-2016




3 download

Embed Size (px)





Financial Analysis



Project Report

Presented to

Dr. Ashwin Modi

Project Guide,

S.K.School of Business Management,

Hemchandrachrya North Gujarat University.


December 1, 2010

In partial fulfillment of requirements for the Managerial Accounting-1 course in the Master of Business Administration Programmed.




PREFACE As a student of MBA it is important to study practical things with theoretical knowledge of financial management.

The Financial Analysis of NIRMA Ltd based on the Annual reports for three consecutive years from the year 2008-09 to 2009-10.

The basic objective behind making such analytical reports is to have the knowledge of sales Oriented and corporate environment. Moreover we can develop written communication and analytical skill.

The report contains information about financial condition of the company. It also highlight future plan of the company. Also it contains growth rate of company in various aspects and financial soundness of company. As it was our first financial analysis, we learnt a lot.


ACKNOWLEDGEMENTQuality is never an Accident it is always the result of an intelligent effect. There must be a will to produce a superior thing. All we need in this world is hard work and confidence and the success is sure. Success is not a one-man phenomenon but it is the result of working together.

First and for most, we would like to express my deepest gratitude towards Dr. Ashvin Modi Sir, Faculty of S.K.S.B.M, Patan. For his consent and support, we are profoundly grateful to him, who has shared his precious time to help us and for giving us valuable guidance to develop this report.

We would like to thank, who have helped us for providing valuable Information for making project report.

Last but not the least; we are very thankful to all the staff members and none teaching staff for their expert guidance and continuous encouragement throughout, to see that maximum benefit is taken out of this exercise.

At last, let us express our heartfelt gratitude to all those who helped us directly or indirectly in completing this project, from beginning.

EXECUTIVE SUMMARYOur Financial Analysis project is on NIRMA Ltd.. Main objective of this project is to know the financial strengths and weaknesses of NIRMA Ltd. For that we had references the three consecutive years annual report from 2008 to 2010. In addition to these annual reports of Nirma Ltd we had also used various Books and Web based information to cover the current trends of the company and its competitors, as well as the whole industry.

To analyze the firm, we have used various calculation based ratios and also study some other statements like Trends analysis, Cash flow statements, DU-Pont Charts etc.

We found that the Nirma Ltd is doing well in general. Most of the graphs and Ratios are supporting us to say Nirma a good company. Nirma is consistently going ahead. Nirma has done a good job in the market of detergent and soaps, but still there is a space for Nirma in various other products, and also the company has to concentrate on spreading its business as well. Though the sales of a company have decreased, the Net profit is increase slightly. But the decrease in the sales is not a good sign for company.

CONTENTSNoSub No.Particulars.Page No.



Executive summary

11.1Introduction of company2

1.2Group of Company3

1.3History of Company4

1.4Nature of Business5

1.5Product Profile6

1.6Basic Detail of Company6

1.7Board of Directors8

1.8Bankers and Auditors9

1.9Share holding pattern9

2Balance sheet :Trend and vertical Analysis11

3Trend Analysis of Profit and Loss Account : Trend and Vertical Analysis18

4Analysis of Ratios27

4.1Liquidity Ratios28

4.2Profitability Ratios31

4.3Assets Turnover Ratios36

4.4Financial Ratios43

4.5Valuation Ratios48

5Du Pond Chart52

6Comparison with peers and Future development55

7Recommendations and Suggestions63


LIST OF TABELSNo.ParticularPage No.

1Listing on BSE9

2Shareholding Pattern9

3Balance Sheet12

4Trend Analysis of Balance Sheet14

5Vertical Analysis of Balance Sheet17

6P-L Statement19

7Trend Analysis of P-L statement20

8Vertical Analysis of P-L statement22


10Total Assets and Liabilities24


12Current Ratio29

13Quick Ratio30

14Net Working Capital30

15Gross Profit Ratio31

16Operating Profit Ratio33

17Net Profit Ratio33




21Net Fixed Turnover38

22Inventory Turnover39

23Average Age Of Inventory40

24Debtors Turnover41

25Average Age Of Debtor42

26Equity Ratio44

27Debt Ratio45

28Debt Equity Ratio46

29Interest Coverage Ratio47



32Dividend Yield50

33P/E Ratio51

LIST OF GRAPHNo.ParticularPage No.

1Shareholding Pattern10

2Trend Analysis of Balance Sheet-115

3Trend Analysis of Balance Sheet-215

4Trend Analysis of P-L statement21

5Trend Analysis of P-L statement-221


7Total Assets and Liabilities24


Chapter: 1

Introduction of Company

1.1 Name of Company

1.2 Group of Company

1.3 History of Company

1.4 Nature of Business

1.5 Product Profile

1.6 Basic Detail of Company

1.7 Board of Directors

1.8 Bankers and Auditors

1.9 Share holding pattern1.1 Name of the Company

Nirma is one of the few names - which are instantly recognized as a true Indian brand, which took on mighty multinationals and rewrote the marketing rules to win the heart of princess, i.e. the consumer. Nirma is one of the good reputed companies in India. The people of Gujarat have a proud for this company because it is also provide an Education

Nirma, the proverbial Rags to Riches saga of Dr. Karsanbhai Patel, is a classic example of the success of Indian entrepreneurship in the face of stiff competition. Starting as a one-man operation in 1969, today, it has about 14,000 employee-bases and annual turnover is above Rs. 3350 cores.

India is a one of the largest consumer economy, with burgeoning middle class pie. In such a widespread, diverse marketplace, Nirma aptly concentrated all its efforts towards creating and building a strong consumer preference towards its value-for-money products.

It was way back in 60s and 70s, where the domestic detergent market had only premium segment, with very few players and was dominated by MNCs. It was really an innovative, quality product with indigenous process, packaging and low-profiled marketing, which changed the habit of Indian housewives for washing their clothes. In a short span, Nirma created an entirely new market segment in domestic marketplace, which is, eventually the largest consumer pocket and quickly emerged as dominating market player a position it has never since relinquished. The performance of Nirma during the decade of 1980s has been labeled as Marketing Miracle of an era. During this period, the brand surged well ahead its nearest rival Surf, which was well-established detergent product by Hindustan Lever. It was a severing battering for MNC as it recorded a sharp drop in its market share. Nirma literally captured the market share by offering value-based marketing mix of four Ps, i.e. a perfect match of product, price, place and promotion.

Now, the year 2008 sees Nirmas annual sales touch 8, 00,000 tones, making it one of the largest volume sales with a single brand name in the world. Looking at the FMCG synergies, Nirma stepped into toilet soaps relatively late in 1990 but this did not deter it to achieve a volume of 100000 per annum. This makes Nirma the largest detergent and the second largest toilet soap brand in India with market share of 38% and 20% respectively. In 2000, Nirma had a 15% share in the toilet soap segment and more than 30% share in the detergent market. Aided by growth in volumes and commissioning of backward integration projects, Nirma's turnover for the year ended March 2000 increased by 17% over the previous fiscal, to Rs. 12.17 bn.

It has been persistent effort of Nirma to make consumer products available to masses at an affordable price. Hence, it takes utmost care to provide finest products at the most affordable prices. To leverage this effort, Nirma has gone for massive backward integration along with expansion and modernization of the manufacturing facilities.

The main objective behind modernization plan is of up gradation with resource-savvy technology to optimize capabilities. Nirmas six production facilities, located at different places, are well equipped with state-of-art tech