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SUMMER TRAINING PROJECT

REPORT

ON

FINANCIAL & OPERATIONAL

ANALYSIS of RANKO FREEZE

CORPORATION

Submitted impartial fulfillment of the Requirement of

award of the degree of

Master of business Administration

(Year 2011-13)

Under the Supervision of: Submitted by:

Mr. Tapish Bohra Shreyas Pasricha

Assistant Manager 06716603911

(Ranko Freeze Corp.) MBA (General)

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DECLARATION

I, Shreyas Pasricha, hereby state that this final evaluation report has beensubmitted to University School of Management Studies in partial

fulfillment of the requirements of the Summer Internship Program inMBA (Masters of Business Administration) Program Class of 2011.

The empirical information of this report is based on my experience in theSummer Internship Program. Any part of this project has not beenreported or copied from any report of the University and others.

Date: Shreyas Pasricha

Enrollment No.06716603911

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ACKNOWLEDGEMENT

I am writing this final evaluation report during the SummerInternship Program 2012 in the program of Master of Business

Administration on Operations and Financial Analysis forUniversity School of Management Studies, Guru Gobind SinghIndraprastha University.

It has been a great challenge but a plenty of learning andopportunities to gain a huge amount of knowledge on the way ofwriting this report. I could not have completed my internshipwithout the constant guidance of Mr.Sanjay, our amazing

faculty guide, who helped me along the way and was alwaysprepared to give me feedback and guidelines whenever I neededit.And one person, without his help and continuous support Icouldnt have pursued my Summer Internship Program at RankoFreeze Corporation is Mr. Tapish Kumar Bohra.

I have learned a lot during these 6 weeks and I hope you will

find my working as interesting and knowledge earning as I haveand that this report is showing to all. And it will be useful forothers wanting to learn about Summer Internship Program, mycompany Ranko Freeze Corporation, and the Logistics as wellas Supply Chain Industry.

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TABLE OF CONTENTS. No. TOPIC PAGE NO

Executive Summary

1 Chapter 1 Profile of the Company

1.1 Industry Overview

1.2 Company Profile

1.3 Products Offered

2 Chapter 2 Research Methodology and

Design

2.1 Objectives

2.2 Scope

2.3 Limitations

3 Chapter 3 Data Analysis andInterpretation

3.1 Objectives of the Analysis

3.2 Financial/Ratio Analysis

3.3 Operations Analysis

3.4 SWOT Analysis

4 Chapter 4 Conclusions and

Recommendations

4.1 Findings

4.2 Recommendations

4.3 Conclusion

Bibliography

Annexure

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CHAPTER 1

PROFILE OF THE

COMPANY

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CHAPTER - 1 : INTRODUCTION

1.1 The Commercial Refrigeration Industry:

The commercial refrigeration industry includes the Air conditioning and refrigeration

industry under it, but, excludes the Refrigerators, which forms a part of the white

goods industry.

It is a fragmented industry with many regional players and a few national players

wherein the growth is dependent on rise in consumer spending.

Market characteristics:

Commercial refrigeration products have a derived demand -that is, the demand isdependent on the user industries performance.

The products are used mostly in processed foods and beverage segments. Refrigeration components are mostly standardized; Customization occurs mainly

in configuration of cold rooms / cold storage system, where the area to be cooled

will determine the design of the equipment.

Components are often sold on Cash and Carry basis. Seasonal demand for some categories such as Bottle Coolers, Ice Making

Machines etc.

Excise duty: 16 %; Import Duty - Basic: nil, surcharge : 2.5 %, countervailing :16 % and special additional duty : 4 %.

Channels: Direct selling of systems (except upcountry - through agents). Larger players sell components through dealers. Some regional players have tie-ups with national players for market sharing.

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The following figure shows the size of the Air conditioning and Refrigeration Market

in Indias per the latest data collected by a research company1 in this field.

Figure 1

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Industry Structure:

Large number of players (> 1800); most with regional presence. Large presence of the small scale industries (SSIs). Refrigeration assembly units concentrated in West and North zones, which

are also their major markets.

Technology & Condensing Units:

Condensing unit consisting of compressors coils and thermostat - forms the`core of any commercial refrigeration system.

Condensing unit suppliers include Emerson Climate Technologies, Tecumseh,Danfoss, Voltas, Indfos & Alfa Laval.

Compressor is a key component in a condensing unit - accounts for around 70% of the condensing unit cost. Commercial refrigeration compressors are

usually imported.

System performance dependent on key componentscompressors. Components are usually standardized and they are merely assembled and

commissioned on-site.

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Products offered: (Table 1)

Type Specification Usage Players Profile

Bottle Coolers

Market Rs. 35 crs.(US $ 8.1 mn)

- 1000 ltrsFast moving : 100, 250, 350 ltrs

coolinged designing for

individual customers

retail outlets250

, (Bangalore);

Ashwin Industries, (Ahmadabad);Freezking, (Bangalore);Imperial Refrigeration, (Calcutta);Freeze Tech, (Mumbai).

Cold Room/ Walk-in-coolers

Market :Rs. 75 crs(US $ 17.4 mn).

30TFast moving - 1-5 T

ed design forindividual customer, dependingon storage area

Meat and Icecream storage

-30 large players

lore);Hikon,(Cal) Chetan Services, (Chennai);Krishna & Co.,(Mumbai).

Cold Storageto 40 T alone

process

Volume storageandtransportation

-25 players

, (Bangalore) & Electron,(Chennai) are major players.

Water coolers

Market : Rs.125 crs(US $ 29 mn)

-300 ltrs

Medium Temperaturecooling

cooling;

dispensers

-60 playersVoltas, Bluestar, Usha, Sidwal

are majors.

Commercial Freezer

Market : Rs. 30 crs(US $ 7.0 mn)

-800ltrs

Fast moving - 500 ltrs

Restaurants andretail outlets

-200 playersmarket

Tech, (Mumbai); MuraliRefrigeration,(Cochin)

Deep Freezers

Market : Rs. 25 crs(US $ 5.8 mn)

- 600LFast moving 250 ltrs

Used for lowtemperaturestorage

- 200 playersAir Frig, (Bangalore);

Imperial Refrigeration, (Cal);Blue Star

Ice Cream/ SoftieVending MachinesMarket : Rs. 5 crs(US $ 1.2 mn)

-20 ltrsFast Moving : 5 ltrs

applications

Small scalemanufacture ofice creams andsofties

-20 players - small players

Refrigeration, (Chennai)

Display Cabinets

Market :Rs. 25 crs(US $ 5.8 mn)

-120 ltrsFast moving : 60 ltrs

Restaurants andbakeries fordisplay of cakesand ice cream

- 200 players

eeze, (Bangalore)Freeze Tech, (Mumbai)

Ice-Making Machine

Market: Rs.10 crs.(US $ 2.3 mn)

- 5 TR For making icefor fish / meattransportation

players - 11eration, (New

Delhi)Acme Sales, (Bangalore);Air Frig, (Bangalore);Chetan Services, (Chennai);

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Table 2

SWOT analysis of the Commercial Refrigeration Industry

STRENGTHS:

Components availability & prices. Regional - distribution strengths. National - large institutional strengths. Ability to customize refrigeration

configurations quickly. Select products application due to

engineering strengths.

WEAKNESS:

Lack of adequate storage infrastructure -few cold storages, refrigerated trucks.

High level of wastage of food products. Low level of conversion of food products

into processed foods. Seasonality of demand for equipment such

as freezers, ice making machine, bottlecoolers.

Changes in excise and customs duties onrefrigeration components affect theirdemand.

OPPORTUNITIES:

Industry expected to grow around 10%p.a.

Growth in the retailing sector. Investments in cold store / refrigeration

chains across the country. Increase in the demand for fresh fruits and

vegetables (processed as well asunprocessed), milk and milk products, fishand meat products.

Exports thrust, especially in processedfruits& vegetables, fish and meatproducts.

THREATS: New entrants including Carrier

Refrigeration with a wide product range ofrefrigeration components.

The new environmental policies and thecarbon emission norms may also pose athreat to the Industry as some of theexisting products do produce gases that areharmful to the environment.

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1.2 Company Overview

Ranko Freeze Corporation is the leading wholesaler and supplier of

Refrigeration and Air-conditioning spare parts. For more than Two

Decades we have been serving the Indian Sub-Continent and have been

able to carve out our own name in refrigeration industry. We are a one

stop shop for all the Refrigeration and Air-conditioning spares, satisfying

our customers entire requirement under one roof.

It is known for dependability and reliability and presently in their trading

activities, represent the leading icons, like VOLTAS, Celfrost, Vestfrost,

O General, Polaris, CIBIN, Danfoss, Maneurop, EMERSON

COPELAND, Emkarate, Chemplast, BITZER, LAE, DuPont,

Rothenberger, Ranco Eliwell, Stefani, Jumby etc. etc.

Their product range is well diversified and it maintain a ready stock base

of all the product range in the industry. Their major clients are Retailers

across India especially the Southern and Western Region, wholesalers,

Mechanics and Industries outside Delhi. They believe in Quality andtransparency towards our customers and offer our products at the most

competitive prices and building relationships with their customers

forever.

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Table 3

Fact Sheet of Ranko Freeze Corporation

Year of Establishment 1988

Legal Status of Firm Partnership

Nature of Business Importer, Supplier, Distributor,

Wholesaler, Retailer, Trader

Number of Employees Upto 30 People

Turnover Upto US$ 0.25 Million (or upto Rs. 1

Crore Approx.)

Major Markets Indian Subcontinent

Trade Membership Member of NIRATA (Norther India

Refrigeration and Air conditioning

Traders Association)

Since RFCs inception, quality has been the keyword for them.

The products which are sourced from the trusted manufacturers

of the markets are checked by our professionals in compliance

with international quality standards. Their aim is to offer qualityproducts as per the exact specification of our clients. RFCs

range is supervised on the basis of following parameters:

Durability, Corrosion, Resistance, Functionality, Effective

performance, Low maintenance, Longer functional life.

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Products Offered by Ranko Freeze Corporation :-

S.No. Product

1) Professional Brand Products:

Charging Line Box

Flaring Tool

Wheel Bender

2) Electrical Components:

Videocon Relay

Rotary OLP make

Whirlpool 1340 Relay OLP

3) Timer:BPL Melory Timer

L.G 3 Pin Timer

Godrej F.F Timer

Videocon Small Timer

4) Thermostat:

Godrej, Whirlpool, Indfos, Annapurna

5) Brass Fittings:DIJ, GM, PIM, BAP (All Sizes)

6) Sheet Metal parts, Plastic Parts, Cooling, Coils,

Condensors, Modular, Door Switch, Bulbs, Bulb Holders,

PVC Door Seals, Readymade Gaskets

7) Hydrocarbon Gas:

Durocool, Godrej Smart, Blossom, Infinity Value

8) Empty Cylinders:

1 kg, 2 kg, 3 kg, 5 kg, 10 kg

9) Spray Paint:

Black, White, Silver, Red, Yellow, Blue, Green, Golden and

Chrome

10) Spares:

Teflon Tapes, Rubber Bush, Blades. Tube Cutters

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CHAPTER 2

RESEARCH

METHODOLOGY

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RESEARCH METHODOLOGY

3.1 Purpose of the study:

To find out the Problem is the First Stage of the Research Process. It represents

translating the management problem into research problem. It is well said- A

Problem well defined is a problem Half solved

Ranko Freeze Corporation is one of the Businesses that provide Compressors and

other needed equipments for all the Refrigeration and Air Conditioning units. The

company wants to know that in spite of good quality products and a very large

presence in the industry, what are the reasons that they are still not aware of the

Industry/Company and which affect companys financial health.

3.2 Objectives of the study:

The main objectives of the study are as follows:

To get a brief overview of the companys working. To conduct study on financial aspects of the Company. To find out the challenges for financial growth. To analyze the working of Ranko Freeze Corporation and give suggestions

based on the analysis and research.

To study about the operations analysis of the company regarding its operatingcycle, the amount of receivables etc.

To identify, understand and interpret the problems and put forwardsuggestions.

3.3 Research methodology:

As this type of study or the business was studied for the first time , this research can

be termed as an exploratory research. Also the Company is new, the inputs from this

study will give a more detailed discretion as to what factors need to be studied for a

better understanding of the financial stability and to enhance operational ability of the

organization.

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The major parts of a research methodology are:

Research method- Through secondary data - study, observation,experimentation.

Analysis plan (MS- Excel has been used for analysis of the data.)

3.3.1 Research Design:

Secondary data is any information we may use, but which has not been specifically

collected for the current research. This includes published sources of data, periodicals,

newspaper reports and the internet. In this report, secondary data has been used in the

form of balance sheets and other financial statements. These statements were studied

for the purpose of gaining an insight into the companys financial structure and also

determining some of the factors thus associated with the operations of the company.

Primary research can be defined as a research which involves collecting information

specifically for the study on hand, from the actual sources such as consumers, dealers

or other entities involved in the research. The advantage of primary research is that it

is timely, focused, and involves no unnecessary data collection, which could be a

wasted effort. The disadvantage could be that it is expensive to collect primary data.

But, when an information gap exists, the cost could be more than compensated by

better decisions, which are taken with the collected data.

3.3.2 Data collection Techniques

For completing the research, describing the reason behind the problem and fulfilling

the objectives, data has been collected from the secondary sources. The secondary

sources information is taken mainly from the last three years annual reports of Ranko

Freeze Corporation.

3.3.3 Methods of data collection

Methods of collecting primary data:

There are various methods of data collection. A Method is different from a Tool.

While a method refers to the way or mode of gathering data, a tool is an instrument

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used for the method. The important methods are (a) observation, (b) interviewing,

(c) mail survey, (d) experimentation, (e) simulation, and (f) projective technique.

In this research project the method used for primary data collection is observation.

OBSERVATION:

Observation may be defined as a systematic viewing of a specific phenomenon in its

proper setting or the specific purpose of gathering data for a particular study.

Observation as a method includes both 'seeing' and 'hearing.' It is accompanied by

perceiving as well.

Methods of collecting secondary data:

A clear benefit of using secondary data is that much of the background work neededhas been already been carried out, for example: literature reviews, case studies might

have been carried out, published texts and statistic could have been already used

elsewhere, media promotion and personal contacts have also been utilized. This

wealth of background work means that secondary data generally have a pre-

established degree of validity and reliability which need not be re-examined by the

researcher who is re-using such data.

In this research project undertaken, Ranko Freeze Corporations financial statements

and annual reports for the last three years have been used.

3.3.4 Limitations

I came across certain limitations while preparing this internship report. They are

stated below:

It was impossible for me to collect some data because of the confidential issue.I had to depend on the data of the head office.

As I am an intern, it was not possible for me to prepare the report as I intendeddue to time shortness.

As Ranko Freeze Corporation was a relatively new company, I was madeavailable only two years data on this company.

Mediocre online presence of the company.Other limitations regarding this internship research project are as follows:

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Dependence on an Electronic Computer: O.R. techniques try to find out an optimal

solution taking into account all the factors. In the modern society, these factors are

enormous and expressing them in quantity and establishing relationships among these

require voluminous calculations that can only be handled by computers.

Non-Quantifiable Factors: O.R. techniques provide a solution only when all the

elements related to a problem can be quantified. All relevant variables do not lend

themselves to quantification. Factors that cannot be quantified find no place in O.R.

models.

Distance between Manager and Operations Researcher: O.R. being specialist's job

requires a mathematician or a statistician, who might not be aware of the business

problems. Similarly, a manager fails to understand the complex working of O.R.

Thus, there is a gap between the two.

Money and Time Costs: When the basic data are subjected to frequent changes,

incorporating them into the O.R. models is a costly affair. Moreover, a fairly good

solution at present may be more desirable than a perfect O.R. solution available after

sometime.

Implementation: Implementation of decisions is a delicate task. It must take into

account the complexities of human relations and behaviour.

About the topic

The word analysis is generically defined as follows:

The examination and evaluation of relevant information to select the best course of

action from various alternatives.

From the definition, we can clearly see that analysis is very closely linked to relevant

information and decision making.

Operational analysis is the study of the operation or service delivery process on which

the entire business is built. There can neither be any operational analysis nor any

financial analysis without the existence of this operation.

Financial Analysis mainly deals with the financial statements and related reports that

are generated on a monthly basis like the Profit and Loss Account, Balance Sheet,

Cash Flow and Capital Expenditure Statement.

Financial analysis looks at the end result or the output of any operation or service. By

virtue of looking at the output, financial analysis may not reveal qualitative aspects of

the operation or service. For instance, the monthly Profit and Loss Account may

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show a good profit for the month, but it will not be able to say whether customers

were happy with the product/service provided. It is conceivable that customers are

unhappy with the product/service and decide not to patronize the organization in

future.

Operational analysis goes behind the financial statements and takes a look at the

processes that contribute to the key elements in those statements, namely revenues

and expenses. Often, they emphasize the qualitative aspect of a financial index which

is related to revenues and expenses and may relate to functions like human resources,

training, engineering, etc.,

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CHAPTER 3

DATA ANALYSIS AND

INTERPRETATION

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Financial analysis refers to an assessment of the viability, stability and profitabilityof a business, sub-business or project.

It is performed by professionals who prepare reports using ratios that make use ofinformation taken from financial statements and other reports. These reports areusually presented to top management as one of their bases in making businessdecisions. Based on these reports, management may:

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of

its goods;

Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on

various alternatives in the conduct of its business.

Goals

Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-term andlong-term. A company's degree of profitability is usually based on the incomestatement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in thelong-term;

3. Liquidity - its ability to maintain positive cash flow, while satisfying immediateobligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financialcondition of a business as of a given point in time.

4. Stability- the firm's ability to remain in business in the long run, without having tosustain significant losses in the conduct of its business. Assessing a company'sstability requires the use of both the income statement and the balance sheet, as wellas other financial and non-financial indicators.

Methods:Financial analysts often compare financial ratios (of solvency, profitability, growth,etc.):

Past Performance - Across historical time periods for the same firm (the last 5years for example),

Future Performance - Using historical figures and certain mathematical andstatistical techniques, including present and future values, This extrapolationmethod is the main source of errors in financial analysis as past statistics can bepoor predictors of future prospects.

Comparative Performance - Comparison between similar firms.

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Comparing financial ratios are merely one way of conducting financial analysis.Financial ratios face several theoretical challenges:

1) They say little about the firm's prospects in an absolute sense. Their insightsabout relative performance require a reference point from other time periods

or similar firms.2) One ratio holds little meaning. As indicators, ratios can be logically

interpreted in at least two ways. One can partially overcome this problem bycombining several related ratios to paint a more comprehensive picture of thefirm's performance.

3) Seasonal factors may prevent year-end values from being representative. Aratio's values may be distorted as account balances change from the beginningto the end of an accounting period. Use average values for such accountswhenever possible.

4) Financial ratios are no more objective than the accounting methods employed.Changes in accounting policies or choices can yield drastically different ratio

values.

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OBJECTIVES OF ANALYSIS (viz. the financial aspect):

The analysis would enable the present & the future earning capacity & theprofitability of the concern.

The operational efficiency of the concern can be assessed. Hence, themanagement can easily locate the areas of efficiency and inefficiency.

The solvency of the firm, both short-term & longterm, can be determinedwith the help of the financial statements analysis including ratio analysis,which is beneficial to trade creditors and share & debenture holders.

The comparative studying is possible by the analysis of financial statements.

Analysis of past results in respect of earning & financial position of theenterprise is of great helping forecasting the future results. Hence, it helps inpreparing budget.

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Assets of the Company for 3 Years

Liabilities of the company for 3 years

0

1000000

2000000

3000000

4000000

5000000

6000000

2008 2009 2010

Liabilities

Liabilities

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Opening and Closing Stock for 3 years

RATIO ANALYSIS (For the years 2008,2009 and 2010)

1.Liquidity RatiosIt includes Current ratio and Quick ratio.

A) Current Ratio = Total Current AssetsTotal Current Liabilities

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2008 2009 2010

Year

Opening Stock

Closing Stock

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The objective of calculating current ratio is to assess the ability

of the enterprise to meet its short term liabilities promptly. It isalso used to assess the short term solvency of the businessenterprise since the ratio assumes that current assets can beconverted into cash to meet its current liabilities.

The current ratio of the company has been ideal in the year 2008but came down to 1.90:1 in 2009 and again in 2010 came closeto the ideal situation. Ideal current ratio states a proportion of2:1 between the current assets and the current liabilities of thecompany.

In this case, in all the 3 years, this ratio has been close to theideal situation which indicates that both the current assets aswell as the current liabilities were in a proper proportion inorder to run the business and carry on the trading of goods.

1.8

1.85

1.9

1.95

2

2.05

2.1

2008 2009 2010

Ratio

Ratio

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2.Solvency RatiosA) Debt Equity Ratio = Total Debt

Owners Funds

The Debt-Equity ratio is computed to ascertain the soundness ofthe long term financial position of the firm. This ratio explains arelationship between debt and the equity. Debt means long termloans. Equity means shareholders funds or the owners capital.

Here in this case, this ratio has been less than 2:1 in all the 3years which indicates that there has been more use of ownerscapital rather than the debt in the form of long term loans. Anideal situation would be 2:1 but in 2008 this ratio was close to1:1, in 20091.1:1 and in 20101.25:1.

It shows that the proportion of total funds acquired by the firm byway of loans has been less when compared with the ideal

situation.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

20082009

2010

Ratio

Ratio

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3. Turnover RatiosIt includes Stock Turnover Ratio, Working Capital Turnover

Ratio, Total Assets to Debt Ratio and Fixed Assets TurnoverRatio.

A)Stock Turnover Ratio = Cost Of Goods SoldAverage Inventory

Inventory Turnover Ratio establishes relationship between thecost of goods sold during a given period and the average amountof inventory carried during that period. It indicates whether theinvestment in stock has been effectively used or not. Higherratio indicates that more sales are being produced by a unit ofinvestment in stocks.

In 2008, the stock turnover ratio was 1.18 times which indicatesa lower ratio. But in 2009 this number rose to 1.99 times which

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2008

2009

2010

Ratio

Ratio

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indicates that the company was producing more sales by a unitof investment in stocks. In 2010, this ratio again reduced andcame to 1.23 times which indicates lower sales being made bythe firm.

B) Working CapitalTurnover Ratio = Sales

Working Capital

(C.AC.L)

This ratio indicates the number of times a unit invested inworking capital produces sale. Working capital can be computed

by deducting current liabilities from current assets. Higher theratio, the better it is.

1.8

1.85

1.9

1.95

2

2.05

2.1

2008 2009 2010

Ratio

Ratio

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In the case of this company, the ratio was 2.07 times in 2008,1.90 times in 2009 and 1.99 times in 2010. This shows that inthese 3 years, the ratio was almost similar but since the ratio wason the lower side, it depicts that the company was not quiteefficient in using the working capital properly which resulted inunder-trading of goods.

C) Total Assets to Debt Ratio = Total AssetsLong Term Debts

Total assets to debt ratio establishes a relationship between totalassets and total long term debts of the company. An idealsituation arrives when this ratio is 2:1.

In 2008, the companys total assets to debt ratio was 3.95:1, in

2009 it was 3.76:1 and in 2010 it was 3.05:1 which indicatesthat although this ratio was on the declining stage, still it was

0

1

2

3

4

5

6

7

2008

2009

2010

Ratio

Ratio

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much higher when compared with the ideal situation. Therefore,it can be said that the higher ratio in this case represents highersecurity to lenders for extending long term loans to the business.

D) Debtors Turnover Ratio = Net SalesDebtors + Bills Receivables

This ratio establishes the relationship between net credit sales

and average debtors of the year. It indicates the number of timesthe receivables are turned over in a year in relation to sales. Itshows how quickly debtors are converted into cash. A high ratiois better since it would indicate that debts are being collectedmore promptly.

In all the 3 years of comparison, this ratio was on the higher sideas it was 6.89 times in 2008, 4.38 times in 2009 and 4.95 times

in 2010. Though it declined in 2009 and 2010 but still it

0

1

2

3

4

5

6

7

2008 2009 2010

Ratio

Ratio

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indicated that the firm was quite efficient in collecting the debtsand its operating cycle was moving quite nicely on the positivedirection.

4. Operating Ratio = Cost of Goods Sold + Operating Expenses x 100Net Sales

The operating ratio is computed to establish relationship

between operating costs and net sales. This ratio indicates theproportion that the cost of sales or operating cost bears to sales.Cost of sales includes direct cost of goods sold as well as otheroperating expenses, administration, selling and distributionexpenses which have matching relationship with sales.

Operating ratio plus net profit ratio is 100.In the year 2008, the operating ratio of the company was 96.9%

which indicates decline in efficiency. Similarly in 2009, it was96.39% and in 2010 it was 92.5%. This indicates that the ratio

90.00%

91.00%

92.00%

93.00%

94.00%

95.00%

96.00%

97.00%

2008 2009 2010

Ratio

Ratio

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was gradually declining and with time it indicated increase inefficiency of the company.

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SWOT ANALYSIS

STRENGTHS:

1. Company having experience of about two decades, isconfident of providing almost all kinds of goods to itscustomers whatever may be the season.

2. Company is regularly trying to enter into new areas ofoperation so that it can expand the area of trading of itsgoods and capture a big amount of market.

WEAKNESS:

1. Voluminous data makes working of company slow.2. Limitation of data collection leads to delay in updating the

new connections.3. Company is not upgrading to new technology and opting for

computerized stock verification which is leading tomismanagement of inventory resulting in losses.

OPPORTUNITIES:

1. Adequate training to the staff to manage the operating cycle.2. An opportunity to grow by working systematically.3. Good personal growth of the staff as well as the

management.4. .

THREATS:

1. Increasing competition.2. Complacency and arrogance.

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CHAPTER 4

CONCLUSIONS

AND

RECOMMENDATIONS

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Conclusions

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Recommendations

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ANNEXURES

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RANKO FREEZE CORPORATION1571/72, Kucha Dhakhni Rai Street, Daryaganj,

New Delhi110002Balance Sheet As On 31st March, 2008

Liabilities Amount Assets Amount

Partners Capital A/c

Mr. Kamal Kumar Ranka

Mr. Prakash Chandra

Bohra

Unsecured Loans

Current Liabilities

Sundry Creditors

Advances Received from

Clients

Expenses Payable

Bank of Baroda

8,92,744.52

62,477.87

9,72,738

1,867,998.97

6,543

19,120.38

16,270.43

Fixed Assets

Current Assets

Closing Stock

Sundry Debtors

Loans & Advances

Security Deposit with

MTNL

Prepaid InsuranceSecurity Deposit with

Reliance

Sales Tax Refundable

Cash & Bank Balances

105,821

3,098,786.03

5,47,818.35

7,200

2,2192,000

15,256.78

58,798.25

3,837,899.42 3,837,899.41

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New Delhi110002Balance Sheet As On 31st March, 2009



Mr. Kamal Kumar

Ranka

Mr. Prakash Chandra

Bohra

Unsecured Loans

Current Liabilities

Sundry Creditors

Advances Received

from Clients

Expenses Payable

Bank of Baroda

9,29,196.42

70,405.77

1,193,421

2,214,022.08

7,454

32,678

16,270.43

Fixed Assets

Current Assets

Closing Stock

Sundry Debtors

Loans & Advances


MTNL


RelianceVAT/CST Receivable

Blowtech Air Device

Boulton Trading

Corporation

D.D Motors

Cash & Bank

Balances

Cash in Hand

Bank of Baroda

98,696

3,025,650

9,23,542.95

7,200

2,000

48,049.55

2,483

5,265

10,000

39,771.75

3,35,203.27

4,497,861.52 4,497,861.52

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New Delhi110002

Balance Sheet As On 31st March, 2010



Mr. Kamal Kumar

Ranka

Mr. Prakash Chandra

Bohra

Secured Loans

Unsecured Loans

Current Liabilities

Sundry Creditors

Expenses Payable

1,022,017.87

2,48,182.22

3,27,075.40

1,322,310

2,089,303.59

31,877

Fixed Assets

Current Assets

Closing Stock

Sundry Debtors

Loans & Advances


MTNL


RelianceVAT/CST Receivable

Cash & Bank

Balances

Cash in Hand

Bank of Baroda

637,362

2,998,652.42

9,20,823.40

7,200

2,000

1,18,462.41

38,970.50

3,17,301.59

50,40,772.32 50,40,772.32

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New Delhi110002Trading and Profit & Loss A/c As On 31st March, 2008

Particulars Amount Particulars Amount

To Opening Stock

To Purchases

To Carriage Inward

To Gross Profit C/d

To Rent

To Salary

To Printing & StationeryTo Shop Expenses

To Conveyance Expenses

To Travelling Charges

To Packing & Forwarding

Charges

To Staff Welfare & Sales

Promotion

To Postage & Stamps

Expenses

To Interest Paid

To Accounting Charges

To Bank Charges

To Membership &

Subscription Expenses

To Telephone Expenses

To Insurance Charges

To Vehicle Oil &Maintenance

To Legal & Professional

Expenses

To Additional Sales Tax

To Depreciation

To Net Profit Carried

Forward

2388941.51

3957638.74

5168

522464.88

5760

720004377

45459

5610

45927

10703

4906

1406

81000

18000

11161.50

1200

49895.38

2617

211805500

3297

16769

116700.03

By Sales (Net)

By Closing Stock

By Gross Profit B/d

By Short & Excess

By Rebate & Discount

3775427

3098786.03

522464.880.03

1003

Total 523467.91 Total 523467.91

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To Opening Stock

To Purchases

To Carriage Inward

To Gross Profit C/d

To Rent

To SalaryTo Printing & Stationery

To Shop Expenses



To Packing & Forwarding

Charges


Promotion

To Postage & Stamps Expenses

To Interest Paid

To Accounting Charges

To Bank Charges

To Membership & Subscription

Expenses


To Audit Fees

To Vehicle Oil & Maintenance

To Legal & Professional

ExpensesTo Rebate & Discount

To Electricity Charges

To Depreciation

To Net Profit Carried Forward

3186445

3304707.29

12809

569470.91

6120

780005785

9569

5165

29366

12265

4134

2044

129294

18000

6394

1000

35817

5045

23736

11000

484.13

24240

15563

146449.78

By Sales (Net)

By Closing Stock

By Gross Profit B/d

4047782.20

3025650

569470.91

569470.91 569470.91

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To Opening Stock

To Purchases

To Carriage Inward

To Gross Profit C/d

To Rent

To Salary

To Printing & Stationery

To Shop Expenses



To Packing & Forwarding Charges


Promotion

To Postage & Stamps Expenses

To Interest PaidTo Accounting Charges

To Bank Charges


To Audit Fees

To Vehicle Oil & Maintenance

To Legal & Professional Expenses

To Rebate & Discount

To Electricity Charges

To Depreciation

To Interest on Car LoanTo Net Profit Carried Forward

3025650

3674088.76

12325

844785.66

12000

82800

5693

22462

5630

54031

1293

4361

2554143210

19800

7641

37179

5500

23453

11000

562.12

22340110806

42495

341611.89

By Sales (Net)

By Closing Stock

By Gross Profit B/d

By Balance Written Off

4558197

2998652.42

844785.66

119358.25

964143.91 964143.91

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New Delhi110002

Sundry Creditors for the year 2007-08

S.No. Name of The Party Amount

1) M/s. Bhartia Metal Components 119,686

2) M/s. B.K Industries 48,284

3) M/s. Blackcat Industries 24,975

4) M/s. Boulton Trading Corporation 18,281

5) M/s. Classic Enterprises 28,3916) M/s. Cold-Gold Refrigeration 56,312

7) M/s. Deepika Plastics 71,146

8) M/s. Duomatic Electric

Corporation

35,539

9) M/s. Gagan Engineering Works 258,516

10) M/s. Galaxy International 89,191

11) M/s. Hi-Tech Industries 84,897

12) M/s. Indus Engg. Co. 399,658

13) M/s. Jain Engg. Works 51,336

14) M/s. J.K Industries 48,952

15) M/s. Jyotee Refrigeration 46,649

16) M/s. Malhotra Engineering Works 74,395

17) M/s. Peeco Metal Industries 14,182

18) M/s. Pulsar Instruments, Gujarat 20,000

19) M/s. Real Polymers 28,72020) M/s. Sanjay Refrigeration Co. 13,109

21) M/s. Sartaj Machine Tools 22,539

22) M/s. Technical Industries 4,500

15,39,258

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New Delhi110002



1) M/s. Bhartia Metal Components 161,556


3) M/s. Chandan Industries 111,831

4) M/s. Chaman Lal & Sons 12,240

5) M/s. Cold-Gold Refrigeration 29,0126) M/s. Deepika Plastics 103,783

7) M/s. Duomatic Electric

Corporation

35,539

8) M/s. Gagan Engineering Works 689,739





13) M/s. Jyotee Refrigeration 35,149

14) M/s. Malhotra Engineering Works 14,601

15) M/s. Patel Packers 11,024

16) M/s. Sanjay Refrigeration Co. 9,878

20,07,360

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New Delhi110002



1) M/s. Allied Industries 2,520


3) M/s. Bhartia Metal Components 1,82,914

4) M/s. Chaman Lal & Sons 26,724

6) M/s. Deepika Plastics 1,57,0527) M/s. Elin Electronics Ltd. 20,847

8) M/s. Gagan Engineering Works 6,63,315





13) M/s. Laxmi Spare Parts 56,963

14) M/s. Mittal Refrigeration 44,550

15) M/s. Patton Refrigeration India 25,368

16) M/s. Sanjay Refrigeration Co. 5,852

19,26,004

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New Delhi110002

Sundry Debtors for the year 2007-08


1) M/s. Acme Refrigeration 14,148

2) M/s. Acme Sales 46,993

3) M/s. Air Conditioning

Components

308

4) M/s. Best Refrigeration 43,2645) M/s. Chandra Industries 10,730

6) M/s. Cool Point 6,677

7) M/s. Cool Sales 19,838

8) M/s. Cool Tech 6,655

9) M/s. Durga Trading Co. 9,562

10) M/s. Flowertech Products Co. 4,500

11) M/s. Golden Refrigeration 5,479

12) M/s. Intercool Refrigeration 111,649

13) M/s. Jupiter Refrigeration 5,876

14) M/s. New Swastik Refrigeration 10,577

15) M/s. Precision Components 7,875

16) M/s. Rise Refrigeration Co. 74,298

17) M/s. R.K. Trading Coporation 6,650

18) M/s. Royal Refrigeration 9,578

19) M/s. Saurashtra Refrigeration 9,39120) M/s. Shrijan Export 15,132

4,19,180

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New Delhi110002





4) M/s. Best Refrigeration 26,394

5) M/s. Chandra Industries 10,694

6) M/s. Cool Point 29,7817) M/s. Cool Sales 104,393









16) M/s. Saurashtra Refrigeration 39,051

17) M/s. Shrijan Export 8,770

5,66,343

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New Delhi110002





4) M/s. Best Refrigeration 31,161

5) M/s. Chandra Industries 10,694

6) M/s. Cool Point 12,1617) M/s. Cool Sales 60,600









16) M/s. Saurashtra Refrigeration 17,105

17) M/s. Shrijan Export 19,442

4,18,443

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BIBLIOGRAPHY

Company Records

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Documents