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Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
Anand ceat tyre ltd afm project
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  • 1. A Project Report On Financial Analysis Of CEAT TYRE LTD Submitted to S.V. Institute of Management KadiSarvaVishwavidyalaya University On DD/MM/YY In Partial fulfillment of the requirements for the Accounting for Managers course in the Master of Business Administration Programme Submitted By MBA semester 1ANAND SHAH ROLL NO:- 41 DIVISION:- BTIWARI SANJAY ROLL NO:- 54 DIVISION:- B 1
  • 2. PREFACEThe MBA degree course has its own distinguished & uniquesolidarity like other professional course; one of its basicrequirements during the study terms for the student of first semesterof MBA is to make a financial report on an organization. We haveselected “CEAT TYRE LTD” for making our project report.CEAT is a well-known company. It has to produce rubber &tyres inIndia & export in all over the world; in today‟s fast changing &technological developing world management of finance is veryimportant phase. In this globalization age, corporate sector of thecountry has to stand highly competitive market & further expansionfinance is also needed for day to day requirement. The main objectof the practical study at MBA level is to develop the knowledgeabout the finance function make proper decision & to handle anorganization.The preparation of this project report is to give the basic knowledgeabout the industry & how the industry was perform well in themarket. 2
  • 3. ACKNOWLEDGEMENTWe are interested all our caliber, attention & knowledge in preparing this projectreport & while preparing this report we had got to know many things about theindustries & their problems, growth, structure, development etc..With the presentation of this report we express our gratitude to thanks HODDr.BHAVIN PANDYA, ProfessorNIKUNJ PATEL, ProfessorKALPESHPRAJAPATI& S. V. Institute of Management for the encouragement & supportthroughout the preparation of report.We are very glad to have such co-operation & friendly professors who helped usevery time without hesitating & gave us the best valuable knowledge. Thank yousir for making us know you will be there when we need somebody. 3
  • 4. TABLE OF CONTENTChapter No Topic Page NoChapter-1 Introduction to the company 6Chapter-2 Comparative balance sheet & Analysis of balance 16 sheetChapter-3 Comparative Profit & loss& Analysis of Profit & 19 lossChapter-4 Common size statement 22Chapter-5 Trend Analysis 28Chapter-6 Analysis of Cash flow 35Chapter-7 Ratio Analysis 37Chapter-8 Recommendation & suggestion 66Chapter-9 Contemporary issue in accounting of the 68 companyChapter-10 Bibliography 76Chapter-11 Annexure 78 4
  • 5. Chapter-1Introduction toThe Company 5
  • 6. (A)HISTORY OF THE ORGANIZATIONOn the road since 1958, CEAT has run up to be one of the best tyre manufacturersin the business. We not only make trailblazing tyres, but also market tubes andflaps. And thats not all. At CEAT we personify our business; tough yet smooth,secure yet ready to explore the undaunted.They are young and revving to go; with a maturity that comes with years of marketpresence. More than 3500 Cr annual turnover, an impressive list of clients andOEMs, various awards and certificates are statistics that could speak for them. Buttheyd rather scorch the road with their performance!They believe that tyres are not just accessories; they are the force that moves theiraspirations. With them we get to choose from a wide range of tyres that suit theirneeds and vehicle type. (Not to mention, their radials are racers in the worldmarket!) Strength is one of the most important attributes of our products, whichcomplements our solid foundation as a part of RPG Enterprises. Our commitmentto quality ensures that you have a safe ride, always. So go on, defy destiny. 6
  • 7. (B)CORPORATE INFORMATION  Board of DirectorsR. P. GoenkaChairmanH. V. GoenkaVice-ChairmanAnantVardhanGoenkaManaging DirectorParas K. ChowdharyWhole-time Director& Chief Management AdvisorVinayBansalA. C. ChokseyS. DoreswamyMahesh S. GuptaHaigreveKhaitanBansi S. MehtaHari L. MundraK. R. Podar 7
  • 8.  Audit CommitteeHari L. MundraChairmanS. DoreswamyMemberMahesh S. GuptaMember  Shareholders/InvestorsGrievance CommitteeMahesh S. GuptaChairmanParas K. ChowdharyMemberS. DoreswamyMember 8
  • 9.  Company SecretaryH. N. Singh Rajpoot  Registered office463, Dr. Annie Besant Road, Worli,Mumbai 400 030  PlantsVillage Road, Bhandup,Mumbai 400 07882, MIDC , Industrial Estate, Satpur,Nasik 422 007Village Gate Muvala, Halol, Panchmahal,Gujarat 389 350  Legal AdvisorsMulla&Mulla and Craige, Blunt &Caroe  AuditorsN. M. Raiji& Co. 9
  • 10.  Registrar & Share Transfer AgentsTSR Darashaw Limited6-10, Haji MoosaPatrawalaIndustrial Estate, 20, Dr. E. Moses Road,Worli, Mumbai 400 011  BankersAxis Bank LimitedBank of BarodaBank of IndiaCorporation BankDeutsche BankExim BankICICI Bank LimitedIndian BankIndustrial Development Bank of IndiaState Bank of IndiaThe Karnataka Bank LimitedUCO BankYes Bank Limited 10
  • 11. (C)PRODUCT OF THE COMPANYCEAT manufactures a wide range of tyres for various customer radials for Indianvehicles and caters to various user segments including Heavy-duty Trucks and Buses Light Commercial Vehicles Earthmovers Forklifts Tractors Trailers Cars SUVs Motorcycles and Scooters Auto-rickshawsIt exports to over 110 countries across the world. In April 2007, the de-merger ofits investment business to a separate investment and finance company wasapproved. CEAT is the only tyre company to be awarded the ISO/TS 16949:2002certification. It is also the 1st Indian tyre company to get a TUV certificate. 11
  • 12. (D)COMPARISON OF LAST FIVE YEAR  Comparison of sales:-YEAR 2007-08 2008-09 2009-10 2010-11 2011-12Sales 2,32,996 2,51,369 2,80,747 3,46,892 4,49,202 sales 600000 500000 400000 300000 sales 200000 100000 0 2007-08 2008-09 2009-10 2010-11 2011-12Interpretation:-The above graph shows the comparison of sales of the company. In 2007-08 thesales of the company was around 2, 32,996 it increases to 2, 51,369 in next years.In 2011-12 it reaches to 4, 49,202. This shows that the company‟s turnover isdouble in last five year. 12
  • 13.  Comparison of profit after tax:-YEAR 2007-08 2008-09 2009-10 2010-11 2011-12PAT 7.54 22.28 161.04 -16.11 148.60 PAT 180 160 140 120 100 80 PAT 60 40 20 0 -20 2007-08 2008-09 2009-10 2010-11 2011-12 -40Interpretation:-The above graph shows the profit after tax of the company of last five year. In2007-08 the profit of the company was very low & it was 7.54%. In 2008-09 itincreases to 22028% in 2009-10 it reaches to 160.04% which is very good for thecompany in 2010-11 the company had made a loss of 16.11% which is not goodfor the company. In last year the company had made a profit of 148.60%. 13
  • 14.  Comparison of dividend:-YEAR 2007-08 2008-09 2009-10 2010-11 2011-12DIVIDEND 3.42 6.85 13.70 0.00 13.70 DIVIDEND 16 14 12 10 8 DIVIDEND 6 4 2 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012Interpretation:-The above graph shows the dividend paid by the company to its share holders inlast five year. In 2010-11 the company had not paid the dividend to its share holderbecause of the company had made a loss of 16.11% 14
  • 15. Chapter-2Comparative Balance sheet & Analysis of balance sheet 15
  • 16.  Comparative Balance sheet:- March March Maech March Maech 2012 2011 2010 2009 2008Sources of fundsTotal Share Capital 34.24 34.24 34.24 34.24 34.24Equity Share Capital 34.24 34.24 34.24 34.24 34.24Share Application Money 3.64 6.05 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 618.46 608.85 594.47 449.45 465.56Revaluation Reserves 0.00 0.00 0.00 4.68 13.45Networth 656.34 649.14 628.71 488.37 513.25Secured Loans 936.43 624.13 312.05 398.12 265.39Unsecured Loans 134.38 130.78 117.32 63.01 64.63Total Debt 1,070.81 754.91 429.37 461.13 330.02Total Liabilities 1,727.15 1,404.05 1,058.08 949.50 843.27Application Of FundsGross Block 2,100.82 1,881.55 1,256.41 1,234.06 1,214.33Less: Accum. Depreciation 576.74 520.46 487.48 458.67 427.71Net Block 1,524.08 1,361.09 768.93 775.39 786.62Capital Work in Progress 13.42 123.40 233.84 19.56 3.48Investments 74.48 86.53 58.51 42.67 9.60Inventories 579.61 567.46 406.08 219.42 341.06Sundry Debtors 612.60 468.68 376.32 318.71 307.91Cash and Bank Balance 33.43 44.62 35.95 43.48 37.55Total Current Assets 1,225.64 1,080.76 818.35 581.61 686.52Loans and Advances 150.93 159.71 117.34 91.84 84.47Fixed Deposits 0.00 3.26 104.04 158.04 4.03Total CA, Loans & Advances 1,376.57 1,243.73 1,039.73 831.49 775.02Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 1,237.95 1,383.58 1,006.54 701.77 706.20Provisions 23.44 27.12 36.36 17.80 25.25Total CL & Provisions 1,261.39 1,410.70 1,042.90 719.57 731.45Net Current Assets 115.18 -166.97 -3.17 111.92 43.57Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00Total Assets 1,727.16 1,404.05 1,058.11 949.54 843.27Contingent Liabilities 182.66 269.63 440.08 159.99 164.33Book Value (Rs) 190.61 187.80 183.60 141.25 145.96 16
  • 17.  Graph of Total Current Assets & Loans & Advances:- Total CA, Loans & Advances1,600.00 1,376.571,400.00 1,243.731,200.00 1,039.731,000.00 831.49 775.02 800.00 Total CA, Loans & 600.00 Advances 400.00 200.00 0.00 2011-12 2010-11 2009-10 2008-09 2007-08  Graph of Current Liabilities & Provision:- Total CL & Provisions 1,600.00 1,410.70 1,400.00 1,261.39 1,200.00 1,042.90 1,000.00 800.00 719.57 731.45 Total CL & Provisions 600.00 400.00 200.00 0.00 2011-12 2010-11 2009-10 2008-09 2007-08 17
  • 18. Interpretation:-The comparative balance sheet shows the comparison of total liabilities & totalassets. How many total assets are there in the company against its total liabilities?In 2007-08 the total liabilities& assets of the company was 843.27& it reaches to1727.16 in 2011-12. Which shows the liabilities & assets of the company increasesto two times, it means the company has a ratio of 1:1 of its liabilities & its assets. 18
  • 19. Chapter-3Comparative profit & loss &Analysis of profit & loss 19
  • 20.  Comparative profit & loss a/c March March March March March 2012 2011 2010 2009 2008IncomeSales Turnover 4,824.81 3,779.66 3,001.83 2,769.43 2,611.41Excise Duty 352.79 294.61 185.33 239.97 275.38Net Sales 4,472.02 3,485.05 2,816.50 2,529.46 2,336.03Other Income 16.85 22.43 20.85 31.50 77.54Stock Adjustments -25.90 151.74 32.25 8.52 25.79Total Income 4,462.97 3,659.22 2,869.60 2,569.48 2,439.36ExpenditureRaw Materials 3,342.81 2,760.57 1,918.46 1,830.69 1,567.37Power & Fuel Cost 151.47 122.61 108.91 90.54 80.16Employee Cost 232.70 204.43 194.68 160.69 143.02Other Manufacturing Expenses 0.00 135.78 97.76 88.04 96.86Selling and Admin Expenses 0.00 240.59 193.02 322.51 257.75Miscellaneous Expenses 463.57 25.73 18.65 10.65 12.95Preoperative ExpCapitalised 0.00 0.00 0.00 0.00 0.00Total Expenses 4,190.55 3,489.71 2,531.48 2,503.12 2,158.11Operating Profit 255.57 147.08 317.27 34.86 203.71PBDIT 272.42 169.51 338.12 66.36 281.25  Graph of Total Income:- Total Income 5,000.00 4,462.97 4,500.00 4,000.00 3,659.22 3,500.00 2,869.60 3,000.00 2,569.48 2,439.36 2,500.00 2,000.00 Total Income 1,500.00 1,000.00 500.00 0.00 2011-12 2010-11 2009-10 2008-09 2007-08 20
  • 21.  Graph of Total expenses:- Total Expenses 4,500.00 4,190.55 4,000.00 3,489.71 3,500.00 3,000.00 2,531.48 2,503.12 2,500.00 2,158.11 2,000.00 Total Expenses 1,500.00 1,000.00 500.00 0.00 2011-12 2010-11 2009-10 2008-09 2007-08Interpretation:-Comparative profit & loss a/c shows the profit & loss of the last five year of thecompany. In 207-08 the income of the company was around to 2439.36 Rs& theexpenditure of the company was 2158.11 Rs. The profit of the company in 2007-08was 281.25 Rs. It increases by time to time. In 2011-12 the company had made aprofit of 272.42 which is low against the profit of 2007-08. In 2008-09 the profit ofthe company was very low. 21
  • 22. Chapter-4Common-size statement 22
  • 23.  Common size Balance Sheet:- March March March March March March March March March March 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008Sources of fundsEquity share capital 34.24 34.24 34.24 34.24 34.24 1.98% 2.44% 3.24% 3.61% 4.06%Share application 3.64 6.05 0 0 0 0.21% 0.43% 0.00% 0.00% 0.00%moneyReserve 618.46 608.85 594.47 449.45 465.56 35.81% 43.36% 56.18% 47.34% 55.21%Revaluation reserve 0 0 0 4.68 13.45 0.00% 0.00% 0.00% 0.49% 1.59%Net worth 656.34 649.14 628.71 488.37 513.25 38.00% 46.23% 59.42% 51.43% 60.86%Secured loan 936.43 624.13 312.05 398.12 265.39 54.22% 44.45% 29.49% 41.93% 31.47%Unsecured loan 134.38 130.78 117.32 63.01 64.63 7.78% 9.31% 11.09% 6.64% 7.66%Total debt 1,070.81 754.91 429.37 461.13 330.02 62.00% 53.77% 40.58% 48.57% 39.14%Total liability 1727.15 1404.05 1058.08 949.5 843.27 100% 100% 100% 100% 100%Application of fundsGross block 2,100.82 1,881.55 1,256.41 1,234.06 1,214.33 121.63% 134.01% 118.74% 129.96% 144.00%(-)Acc.depreciasion 576.74 520.46 487.48 458.67 427.71 33.39% 37.07% 46.07% 48.30% 50.72%Net block 1,524.08 1,361.09 768.93 775.39 786.62 88.24% 96.94% 72.67% 81.66% 93.28%Capital work in 13.42 123.4 233.84 19.56 3.48 0.78% 8.79% 22.10% 2.06% 0.41%progressTotal 1,537.50 1,484.49 1,002.77 794.95 790.10 89.02% 105.73% 94.77% 83.72% 93.69%Investment 74.48 86.53 58.51 42.67 9.6 4.31% 6.16% 5.53% 4.49% 1.14%Inventory 579.61 567.46 406.08 219.42 341.06 33.56% 40.42% 38.38% 23.11% 40.44%Sundry debtors 612.6 468.68 376.32 318.71 307.91 35.47% 33.38% 35.57% 33.56% 36.51%Cash & bank 33.43 44.62 35.95 43.48 37.55 1.94% 3.18% 3.40% 4.58% 4.45%Total current assets 1,225.64 1,080.76 818.35 581.61 686.52 70.96% 76.97% 77.34% 61.25% 81.41%Loans & advances 150.93 159.71 117.34 91.84 84.47 8.74% 11.37% 11.09% 9.67% 10.02%Fixed deposite 0 3.26 104.04 158.04 4.03 0.00% 0.23% 9.83% 16.64% 0.48%Total CA loan &adv 1,376.57 1,243.73 1,039.73 831.49 775.02 79.70% 88.58% 98.26% 87.57% 91.91%Differed credit 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%Current liability 1,237.95 1,383.58 1,006.54 701.77 706.2 71.68% 98.54% 95.13% 73.91% 83.75%Provision 23.44 27.12 36.36 17.8 25.25 1.36% 1.93% 3.44% 1.87% 2.99%Total CL & 1,261.39 1,410.70 1,042.90 719.57 731.45 73.03% 100.47% 98.56% 75.78% 86.74%ProvisionNet current assets 115.18 -166.97 -3.17 111.92 43.57 6.67% -11.89% -0.30% 11.79% 5.17%Misc expenses 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%Total assets 1727.15 1404.05 1058.08 949.5 843.27 100% 100% 100% 100% 100%Contingent liability 182.66 269.63 440.08 159.99 164.33 10.5% 19.20% 41.59% 16.85% 19.49%Book value 190.61 187.8 183.6 141.25 145.96 11.04% 13.38% 17.35% 14.88% 17.31% 23
  • 24.  Graph of total Debts:- Total debt 70.00% 62.00% 60.00% 53.77% 48.57% 50.00% 40.58% 39.14% 40.00% 30.00% Total debt 20.00% 10.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08 Graph of Total CA Loans & Advances:- Total CA loan & adv 120.00% 98.26% 100.00% 88.58% 91.91% 87.57% 79.70% 80.00% 60.00% Total CA loan & adv 40.00% 20.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08 24
  • 25.  Graph of CL & Provision:- Total CL & Provision 120.00% 100.47% 98.56% 100.00% 86.74% 73.03% 75.78% 80.00% 60.00% Total CL & Provision 40.00% 20.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08Interpretation:-Common size balance sheet shows the percentage increases or decreases in theliabilities & in the assets.It shows the increase or decrease the percentage of sharecapital & reserve & surplus. As well as it shows the increase or decrease thepercentage of current assets & current liabilities& provision 25
  • 26.  Common size Profit & loss A/c:- March March March March March March March March March March 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008Sales Turnover 4,824.81 3,779.66 3,001.83 2,769.43 2,611.41 100.00% 100.00% 100.00% 100.00% 100.00%Excise Duty 352.79 294.61 185.33 239.97 275.38 7.31% 7.79% 6.17% 8.66% 10.55%Net Sales 4,472.02 3,485.05 2,816.50 2,529.46 2,336.03 92.69% 92.21% 93.83% 91.34% 89.45%Other Income 16.85 22.43 20.85 31.5 77.54 0.35% 0.59% 0.69% 1.14% 2.97%Stock -25.9 151.74 32.25 8.52 25.79 -0.54% 4.01% 1.07% 0.31% 0.99%AdjustmentsTotal Income 4,462.97 3,659.22 2,869.60 2,569.48 2,439.36 92.50% 96.81% 95.60% 92.78% 93.41%ExpenditureRaw Materials 3,342.81 2,760.57 1,918.46 1,830.69 1,567.37 69.28% 73.04% 63.91% 66.10% 60.02%Power & Fuel 151.47 122.61 108.91 90.54 80.16 3.14% 3.24% 3.63% 3.27% 3.07%CostEmployee Cost 232.7 204.43 194.68 160.69 143.02 4.82% 5.41% 6.49% 5.80% 5.48%Other 0 135.78 97.76 88.04 96.86 0.00% 3.59% 3.26% 3.18% 3.71%ManufacturingExpensesSelling and 0 240.59 193.02 322.51 257.75 0.00% 6.37% 6.43% 11.65% 9.87%AdminExpensesMiscellaneous 463.57 25.73 18.65 10.65 12.95 9.61% 0.68% 0.62% 0.38% 0.50%ExpensesPreoperative 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%ExpCapitalisedTotal Expenses 4,190.55 3,489.71 2,531.48 2,503.12 2,158.11 86.85% 92.33% 84.33% 90.38% 82.64%Net profit 272.42 169.51 338.12 66.36 281.25 5.65% (-4.48%) 11.26% 2.40% 10.77%  Graph of Total Income:- Total Income 98.00% 96.81% 97.00% 96.00% 95.60% 95.00% 94.00% 93.41% 92.78% Total Income 93.00% 92.50% 92.00% 91.00% 90.00% 2011-12 2010-11 2009-10 2008-09 2007-08 26
  • 27.  Graph of Total Expenses:- Total Expenses 94.00% 92.33% 92.00% 90.38% 90.00% 88.00% 86.85% 86.00% 84.33% 84.00% 82.64% Total Expenses 82.00% 80.00% 78.00% 76.00% 2011-12 2010-11 2009-10 2008-09 2007-08Interpretation:-Common size profit & loss a/c shows the increase or decrease the percentage ofincome & expenditure of the company in last five year. In 2007-08 the company‟sincome was 93.41% against its 82.64% expenses. The company had made a profitof 10.77% in 2007-08. In 2010-11 the company had made a loss of 4.48%, thecompany‟s profit was highest in March 2010. 27
  • 28. Chapter-5Trend Analysis(Index Analysis) 28
  • 29.  Trend Analysis of Balance sheet:- March March March March March March March March March March 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008Sources of fundsEquity Share Capital 34.24 34.24 34.24 34.24 34.24 100% 100% 100% 100% 100%Share Application 3.64 6.05 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%MoneyPreference Share 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%CapitalReserves 618.46 608.85 594.47 449.45 465.56 132.84% 130.78% 127.69% 96.54% 100%Revaluation Reserves 0 0 0 4.68 13.45 0.00% 0.00% 0.00% 34.80% 100%Networth 656.34 649.14 628.71 488.37 513.25 127.88% 126.48% 122.50% 95.15% 100%Secured Loans 936.43 624.13 312.05 398.12 265.39 352.85% 235.17% 117.58% 150.01% 100%Unsecured Loans 134.38 130.78 117.32 63.01 64.63 207.92% 202.35% 181.53% 97.49% 100%Total Debt 1,070.81 754.91 429.37 461.13 330.02 324.47% 228.75% 130.10% 139.73% 100%Total Liabilities 1,727.15 1,404.05 1,058.08 949.5 843.27 204.82% 166.50% 125.47% 112.60% 100%Application Of FundsGross Block 2,100.82 1,881.55 1,256.41 1,234.06 1,214.33 173.00% 154.95% 103.47% 101.62% 100%Less: Accum. 576.74 520.46 487.48 458.67 427.71 134.84% 121.69% 113.97% 107.24% 100%DepreciationNet Block 1,524.08 1,361.09 768.93 775.39 786.62 193.75% 173.03% 97.75% 98.57% 100%Capital Work in 13.42 123.4 233.84 19.56 3.48 385.63% 3545.98% 6719.54% 562.07% 100%ProgressInvestments 74.48 86.53 58.51 42.67 9.6 775.83% 901.35% 609.48% 444.48% 100%Inventories 579.61 567.46 406.08 219.42 341.06 169.94% 166.38% 119.06% 64.33% 100%Sundry Debtors 612.6 468.68 376.32 318.71 307.91 198.95% 152.21% 122.22% 103.51% 100%Cash and Bank Balance 33.43 44.62 35.95 43.48 37.55 89.03% 118.83% 95.74% 115.79% 100%Total Current Assets 1,225.64 1,080.76 818.35 581.61 686.52 178.53% 157.43% 119.20% 84.72% 100%Loans and Advances 150.93 159.71 117.34 91.84 84.47 178.68% 189.07% 138.91% 108.72% 100%Fixed Deposits 0 3.26 104.04 158.04 4.03 0.00% 80.89% 2581.64% 3921.59% 100%Total CA, Loans & 1,376.57 1,243.73 1,039.73 831.49 775.02 177.62% 160.48% 134.16% 107.29% 100%AdvancesDeffered Credit 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%Current Liabilities 1,237.95 1,383.58 1,006.54 701.77 706.2 175.30% 195.92% 142.53% 99.37% 100%Provisions 23.44 27.12 36.36 17.8 25.25 92.83% 107.41% 144.00% 70.50% 100%Total CL & Provisions 1,261.39 1,410.70 1,042.90 719.57 731.45 172.45% 192.86% 142.58% 98.38% 100%Net Current Assets 115.18 -166.97 -3.17 111.92 43.57 264.36% -383.22% -7.28% 256.87% 100%Miscellaneous 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%ExpensesTotal Assets 1,727.16 1,404.05 1,058.11 949.54 843.27 204.82% 166.50% 125.48% 112.60% 100%Contingent Liabilities 182.66 269.63 440.08 159.99 164.33 111.15% 164.08% 267.80% 97.36% 100%Book Value (Rs) 190.61 187.8 183.6 141.25 145.96 130.59% 128.67% 125.79% 96.77% 100% 29
  • 30.  Graph of Total Liabilities:- Total Liabilities 250.00% 200.00% 204.82% 166.50% 150.00% 125.47% 112.60% Total Liabilities 100.00% 100% 50.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08  Graph of Total CA Loans & Advances:- Total CA, Loans & Advances1.81.6 160.48%1.4 134.16%1.2 107.29% 1 100%0.8 Total CA, Loans & Advances0.60.40.2 0 2011-12 2010-11 2009-10 2008-09 2007-08 30
  • 31.  Graph of Total CL & Provision:- Total CL & Provisions 250.00% 200.00% 192.86% 172.45% 150.00% 142.58% 100.00% 98.38% 100% Total CL & Provisions 50.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08Interpretation:-Trend analysis shows the analysis of assets & liabilities horizontally. In trendanalysis we have to take one year as a base year & on the bases of that base yearwe have to calculate the percentage of the remaining year.In the above trendanalysis of balance sheet we have to take 2007-08 as a base year & on the base ofthat we have to calculate the percentage of the remaining year. 31
  • 32.  Trend Analysis of Profit & loss A/c:- March March- March March March March March- March March March 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008IncomeSales Turnover 4,824.81 3,779.66 3,001.83 2,769.43 2,611.41 184.76% 144.74% 114.95% 106.05% 100.00%Excise Duty 352.79 294.61 185.33 239.97 275.38 128.11% 106.98% 67.30% 87.14% 100.00%Net Sales 4,472.02 3,485.05 2,816.50 2,529.46 2,336.03 191.44% 149.19% 120.57% 108.28% 100.00%Other Income 16.85 22.43 20.85 31.5 77.54 21.73% 28.93% 26.89% 40.62% 100.00%Stock Adjustments -25.9 151.74 32.25 8.52 25.79 -100.43% 588.37% 125.05% 33.04% 100.00%Total Income 4,462.97 3,659.22 2,869.60 2,569.48 2,439.36 182.96% 150.01% 117.64% 105.33% 100.00%ExpenditureRaw Materials 3,342.81 2,760.57 1,918.46 1,830.69 1,567.37 213.28% 176.13% 122.40% 116.80% 100.00%Power & Fuel Cost 151.47 122.61 108.91 90.54 80.16 188.96% 152.96% 135.87% 112.95% 100.00%Employee Cost 232.7 204.43 194.68 160.69 143.02 162.70% 142.94% 136.12% 112.35% 100.00%Other Manufacturing 0 135.78 97.76 88.04 96.86 0.00% 140.18% 100.93% 90.89% 100.00%ExpensesSelling and Admin 0 240.59 193.02 322.51 257.75 0.00% 93.34% 74.89% 125.13% 100.00%ExpensesMiscellaneous Expenses 463.57 25.73 18.65 10.65 12.95 3579.69% 198.69% 144.02% 82.24% 100.00%Preoperative 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00%ExpCapitalisedTotal Expenses 4,190.55 3,489.71 2,531.48 2,503.12 2,158.11 194.18% 161.70% 117.30% 115.99% 100.00%Operating Profit 255.57 147.08 317.27 34.86 203.71 125.46% 72.20% 155.75% 17.11% 100.00%PBDIT 272.42 169.51 338.12 66.36 281.25 96.86% 60.27% 120.22% 23.59% 100.00% 32
  • 33.  Graph of Total income:- Total Income 200.00% 180.00% 182.96% 160.00% 150.01% 140.00% 120.00% 117.64% 100.00% 105.33% 100.00% 80.00% Total Income 60.00% 40.00% 20.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08 Graph of Total Expenses:- Total Expenses 250.00% 200.00% 194.18% 161.70% 150.00% 117.30% 115.99% 100.00% 100.00% Total Expenses 50.00% 0.00% 2011-12 2010-11 2009-10 2008-09 2007-08 33
  • 34. Interpretation:-Trend analysis of profit & loss a/c shows the increase or decreases the percentageof income or expenditure horizontally. In the above analysis 200-08 as a base year& on the bases of that the remaining percentage will be calculated in 2007-08 thetotal income was 100% it increases to 182.96% in 2011-12. Same as the totalexpenses of the company in 2007-08 was 100% & the expense in 2011-12 itreaches to 194.18% 34
  • 35. Chapter-6 Analysis ofCash flow statement 35
  • 36. Cash flow statement Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Net Profit Before Tax 9.79 33.24 239 -37.17 197.31Net Cash From Operating Activities 72.39 138.64 232.02 131.21 20.47Net Cash (used in)/from -101.21 -483.68 -240.02 -52.68 61.81Investing ActivitiesNet Cash (used in)/from Financing Activities 14.32 252.8 -53.54 81.4 -81.24Net (decrease)/increase In Cash and Cash Equivalents -14.51 -92.24 -61.53 159.93 1.04Opening Cash & Cash Equivalents 47.41 139.64 201.52 41.59 40.55Closing Cash & Cash Equivalents 32.9 47.41 139.99 201.52 41.59Interpretation:-Cash flow statement shows the net cash inflow & net cash out flow of thecompany. In 2007-08 the net cash in the company was 41.59 crore. It reaches to201.52 crore in 2009-10. In 2011-12 the cash of the company was 32.9 crore. 36
  • 37. Chapter-7Ratio analysis 37
  • 38. (A) Meaning and Classification of ratio analysis:- Meaning:- “A ratio is one number expressed in terms of another. It is a mathematical yard stick that measures the relationship between two figures.”  “The term accounting ratio is used to describe significant relationship which exists between figures shows in a balance sheet, in a budgetary control system or in any other part of the accounting organization.”  Business performance can be measured by use of ratios. In fact an analysis of financial statements is possible only when figures are expressed as percentage or ratio. Ratio is of major importance for financial analysis. Classification of ratios:- (1) Profitability Ratio:- “These are the ratios organized to indicate the profitability of the business.” - Gross profit ratio - Net profit ratio - Operating ratio - Expense ratio - Return on capital employed - Return on shareholder fund 38
  • 39. - Return on equity share capital- Earnings per share- Price earnings ratio(2) Liquidity ratio:- “These ratios indicate the poison of liquidity. They are computed to ascertain whether the company is capable of meeting its short term obligation.”- current ratio- liquid ratio- acid teat ratio(3) Leverage ratio:- “These ratio shows composition of capital i.e. proportion of owners capital & capital provided by out sides.”- Proprietary ratio- Debt equity ratio- Capital gearing ratio- Fixed capital to fixed assets ratio 39
  • 40. (4) Turnover ratio:- “These ratios show the efficiency with which resources are employed in business.”- Fixed assets turnover ratio- Total assets turnover ratio- Stock turnover ratio- Debtors ratio- Creditors ratio(5) Coverage ratio:- “These ratios show how better the debts payment is covered by profits in business.”- Debt service coverage ratio- Interest coverage ratio 40
  • 41. (B) Calculation and interpretation of ratio:-1. Profitability ratio:-(A)Gross profit ratio = Gross profit * 100 Sales Gross profit = sales-cogs2011-12 2010-11 2009-10 2008-09 2007-0895285.29*100 56358.1*100 86341.11*100 61059.5*100 67308.86* 100464899.71 346892.25 280747.60 251369.25 232996.6720.50% 16.25% 30.75% 24.29% 28.59%Interpretation:-Profitability ratio shows the profit of the company. Gross profit of the company in2007-08 was 28.59% it reaches 24.29% in next year. In 2009-10 the gross profit ofthe company was 30.75%.In 2010-11 the company‟s profit was very low. 41
  • 42. (B)Net profit ratio = Netprofit * 100 Sales2011-12 2010-11 2009-10 2008-09 2007-081812.95 * 100 2228.33 * 100 16104.15* 100 1611.16 * 100 14860.44* 100464899.71 346892.25 280747.60 251369.25 232996.670.39% 0.64% 5.74% 0.64% 6.38% 2011- 12, 3.72% 2007-08, 6.92% 2010-11, 4.00% 2008-09, 8.39% 2009- 10, 3.28%Interpretation:-Net profit ratio shows the profitabilityof the company. In 2007-08 the profit of thecompany was 6.38% in 2008-09 the profit of the company was 0.64% which isvery low as compare to last year. In 2011-12 the profit of the company is0.39%which is very low in the five years. 42
  • 43. (C)Operating ratio = COGS+ Operating exp *100 Sales2011-12 2010-11 2009-10 2008-09 2007-08369614.42+38128.21*100 290534.15+23627.15*100 194406.49+16310.03*100 190309.75+29488.53*100 165627.81+23134.4*100464899.71 346892.25 280747.60 251369.25 232996.6787.71% 90.56% 75.05% 87.44% 81.09% 2007- 2011- 08, 81.09% 12, 87.71% 2008- 2010- 09, 87.44% 11, 90.56% 2009- 10, 75.05% Interpretation:- Operating expenses ratio shows that how much expenses had made by the company in one year. In 2007-08 the expenses of the company was 81.09% & it reaches to 90.56% in the year 2010-11. In the year 2009-10 the expenses ratio was 75.05% which is low as compare to the other years. 43
  • 44. (D)Expenses ratio:-(1) Administration expenses= Adman. Exp. *100Sales2011-12 2010-11 2009-10 2008-09 2007-08977.24*100 1063.53*100 1188.79*100 1669.92*100 1176.23*100464899.71 346892.25 280747.60 251369.25 232996.670.21% .31% 0.42% 0.66% 0.50% 2011-12, 0.21% 2007-08, 0.50% 2010-11, 0.31% 2009-10, 0.42% 2008-09, 0.66%Interpretation:-Administration expenses show the business expenses of the company. In 2007-08the administration Expenses was 0.50% of the total operating expenses. It reachesto 0.66% in the next year; in 2011-12 the expenses of the company is 0.21% whichis very low as compare to 2007-08. 44
  • 45. (2)Financial expenses= finance exp.*100sales2011-12 2010-11 2009-10 2008-09 2007-0819865.91*100 8675.85*100 5901.44*100 6723.61*100 5841.79*100464899.71 346892.25 280747.60 251369.25 232996.674.27% 2.33% 2.10% 2.67% 2.51% 2007-08, 2.51% 2011-12, 4.27% 2008-09, 2.67% 2010-11, 2.33% 2009- 10, 2.10%Interpretation:-Financial expenses shows the company‟s financial expenses which the companyhad made for improving its performance, its productivity, & for its development.In 2007-08it was 2.51% & it reaches to 4.27% which is double in five years. In2008-09 it was 2.67%, in 2010-11 it was 2.33%. 45
  • 46. (3) Selling & dis. Exp= selling exp*100 Sales2011-12 2010-11 2009-10 2008-09 2007-0838128.21*100 23627.15*100 16310.03*100 29488.53*100 2313.44*100464899.71 346892.25 280747.60 251369.25 232996.673.72% 4.00% 3.28% 8.39% 6.92% 2011- 12, 3.72% 2007-08, 6.92% 2010-11, 4.00% 2008-09, 8.39% 2009- 10, 3.28%Interpretation:-Selling & distribution expenses Shows Company‟s manufacturing expenses &transportation expenses. Advertising & marketing expenses is also covered inselling & distribution expenses. In 2007-08 the expense was 6.92% it reaches3.72% in 2011-12. In 2008-09 it was 8.39% which is very high. 46
  • 47. (E)Return on capital employed= Ebit *100 Capital employed2011-12 2010-11 2009-10 2008-09 2007-082426.99*100 3324.19*100 23899.65*100 3317.22*100 19731.04*100124925.2 127327.98 94076.50 88650.58 77864.811.94% 2.61% 25.40% 3.74% 25.34% 2011-12, 1.94% 2010-11, 2.61% 2007- 08, 25.34% 2009- 10, 25.40% 2008-09, 3.74%Interpretation:-The above ratio shows the return on capital employed by the company on one year.The company had earned 25.34% return on its capital employed. In 2011-12 itsreturn is very low & it is 1.94% of its total capital which is very low & not goodfor the company. 47
  • 48. (F) Return on shareholder fund= PAT *100 SHARE HOLDER FUND2011-12 2010-11 2009-10 2008-09 2007-081812.95*100 2228.33*100 16104.15*100 1611.16*100 14860.44*10067761.25 64914.52 62871.45 48838.15 51325.732.68% 3.43% 25.61% 3.30% 28.95% 2011-12, 2.68% 2010-11, 3.43% 2007- 08, 28.95% 2009- 10, 25.61% 2008-09, 3.30%Interpretation:-Return on shareholders‟ funds shows the hoe much return the shareholder were getin return. In 2007-08 the ratio was 28.95% & after that the return of the companywere declined & reaches to 3.30% in 2008-09. In 2009-10 it increases to 25.61%which is good for the company. 48
  • 49. (G) Return on equity share holder fund= PAT – pref.div *100 Equity share holderfund2011-12 2010-11 2009-10 2008-09 2007-081812.95-0*100 2228.33-0*100 16104.15-0*100 1611.16-0*100 14860.44-0*10067761.25 64914.52 62871.45 48838.15 51325.732.68% 3.43% 25.61% 3.30% 28.95% 2011-12, 2.68% 2010-11, 3.43% 2007- 08, 28.95% 2009- 10, 25.61% 2008-09, 3.30%Interpretation:-This ratio indicates the earning of equity share holders of the company. In 2007-08the ratio was 28.95% & after that the return of the company were declined &reaches to 3.30% in 2008-09. In 2009-10 it increases to 25.61% which is good forthe company. 49
  • 50. (H)Earnings per share= profit available for share holder No of equity shares2011-12 2010-11 2009-10 2008-09 2007-081812.95 2228.33 16104.15 1611.16 14860.443424.35 3424.35 3424.35 3424.25 3424.250.53 rs 0.65 rs 4.70 rs 0.47 rs 4.34 rs 2011-12, 0.53 2010-11, 0.65 2007-08, 4.34 2009-10, 4.7 2008-09, 0.47Interpretation:-Earnings per share shows that how much profit each equity shareholders received.In 2007-08 the earnings of the company was 4.34 Rs& it reaches to 4.70 Rs in2009-10.in 2008-09, 2010-11 it was 0.47 Rs& 0.65 Rs accordingly. This ratio isnot good for the company. 50
  • 51. (J)Price earnings ratio= marketprice of share Earnings of share holders2011-12 2010-11 2009-10 2008-09 2007-08107.20 107.20 107.20 107.20 107.200.53 0.65 4070 0.47 4.33202.26rs 164.92 rs 22.81 rs 228.09 rs 24.76 rs 2007-08, 24.76 2011- 2008- 12, 202.26 09, 228.09 2010- 11, 164.92 2009-10, 22.81Interpretation:-price earnings ratio shows that how much return the shareholders had made by itscurrent market price in the market. In 2007-08 it was around 24.76 Rs, in 2008-09the earnings was 228.09 Rs, in 2010-11 it was 164.92 Rs. This ratio is very goodfor the company. 51
  • 52. 2.Liquidity ratio:-(A)Current ratio:-Current assets Current liabilities2011-12 2010-11 2009-10 2008-09 2007-08144851.18 108402.33 92238.09 73964.32 69055.52177686.09 106734.27 75467.05 48904.12 52827.320.82:1 1.02:1 1.22:1 1.51:1 1.31:1 2011- 12, 0.82 2007-08, 1.31 2010-11, 1.02 2008-09, 1.51 2009-10, 1.22Interpretation:-Current ratio shows that how much current assets & current liabilities were there inthe company. In 2007-08 it was 1.31:1 which means that the company had 1.31current assets against its current liabilities. In 2008-09 it was 1.51:1, in 2009-10 itwas 1.22:1, & in 2011-12 it was 0.82:1 which was very low in the five years. 52
  • 53. (B) Liquid ratio:- liquid Assets Liquid liabilities2011-12 2010-11 2009-10 2008-09 2007-0888182.71 51656.03 51630.52 52022.69 34949.52177686.09 106734.27 75467.05 48904.12 52827.320.50:1 0.48:1 0.68:1 1.06:1 0.66:1 2011-12, 0.5 2007-08, 0.66 2010-11, 0.48 2008-09, 1.06 2009-10, 0.68Interpretation:-Liquid ratio shows that how much liquidity the company has in the market.Whether the company is liable to pay its liabilities or not. This all were calculatedon the bases of liquidity ratio. The company has more liquidity in 2008-09 whichwas 1.06:1 means the company is in strong position to repay its liabilities. In 2011-12 it was 0.50:1 which shows that the company had borrowed more money fromthe market. 53
  • 54. (C)Acid test ratio:- cash & bank Liquid liabilities2011-12 2010-11 2009-10 2008-09 2007-083595.98 4788.06 13998.91 20151.84 4158.70177686.09 106734.27 75467.05 48904.12 52827.320.20:1 0.05:1 0.19:1 0.41:1 0.08:1 2007-08, 0.08 2011-12, 0.2 2010-11, 0.05 2008-09, 0.41 2009-10, 0.19Interpretation:-Acid test ratio shows that how much cash is there in the hand of the companyagainst its liquid liabilities. In 2007-08 it was around to 0.08:1, in 2009-10 it was0.41:1. In last year it was around to 0.2:1 which is very low & it is not good for thecompany. 54
  • 55. 3. Leverage ratio:-(A)Proprietary ratio: -proprietary fund *100Total assets2011-12 2010-11 2009-10 2008-09 2007-0867761.25 64914.52 62871.45 48838.15 51325.73306216.95 265504.23 198365.44 157725.72 149025.2122.13% 24.45% 31.69% 30.96% 104.69% 2011- 12, 22.13% 2010- 11, 24.45% 2007- 08, 104.69% 2009- 10, 31.69% 2008- 09, 30.96%Interpretation:-Proprietary ratio shows the total proprietary fund against its total assets. In 2007-08The proprietary ratio was around 104.69% which is very high against its totalassets. In 2008-09 it was around 30.96%, in 2009-10 it was 31.69% & in 2011-12it was 22.30% which is good for the company. 55
  • 56. (B) Debt equity ratio:-long term debt *100Eq. share cap.Long term debt = secured loan2011-12 2010-11 2009-10 2008-09 2007-0857163.95 62413.46 31205.11 39812.43 26539.0867761.25 64914.52 62871.45 48838.15 51325.7384.36% 963.15% 49.63% 81.52% 51.71% 2007- 2011- 2008- 08, 51.71% 12, 84.36% 09, 81.52% 2009- 10, 49.63% 2010- 11, 963.15%Interpretation:-The above ratio shows how much debt the company has against its equity shareholders. In 2007-08 the company has 51.71% debts against its equity. In 2010-11 itreaches to 963.15% which is very high & not good for the company, in 2011-12 itwas around 84%. This ratio shows that the company has more debt against itsequity share holders. 56
  • 57. (C) Capital gearing ratio:-Fixed charge bearing cap. *100 Equity share capitalFixed charge bearing capital = secured loan + preference share2011-12 2010-11 2009-10 2008-09 2007-0857163.95 62413.46 31205.11 39812.43 26539.083424.35 3524.35 3424.35 3424.25 3424.2516.69% 18.23% 9.11% 11.63% 7.75% 2007- 08, 7.75% 2011- 2008- 12, 16.69% 09, 11.63% 2009- 2010- 10, 9.11% 11, 18.23%Interpretation:-Capital gearing ratio shows the company‟s long term borrowing funds which acompany had borrowed. In 2007-08 the company had 7.75% of the total equity. In2008-09 it was around 11.63%, in 2009-10 it was around 9.11% in 2011-12 it was16.69% which shows that the company had had taken more borrowings from outsiders. 57
  • 58. (D)Fixed asset to fixed capital:- Fixed assets Fixed capital2011-12 2010-11 2009-10 2008-09 2007-08150152.73 148448.92 100276.58 79494.69 79009.96124925.2 127327.98 94076.56 88650.58 77864.811.20:1 1.17:1 1.07:1 0.89:1 1.01:1 2007-08, 1.01 2011-12, 1.2 2008-09, 0.89 2010-11, 1.17 2009-10, 1.07Interpretation:-The above ratio shows that how much fixed assets were there in the companyagainst its fixed capital. In 2007-08 it was around 1.01:1 which is good for thecompany. In 2008-09 it reaches to 0.89:1 means the company has 0.89 fixed assetsagainst its 1 capital. In 2011-12 it was around 1.2:1 which is good for thecompany. 58
  • 59. 4.Turnover ratio:-(A) Fixed assets turnover ratio:-Sales Fixed assets2011-12 2010-11 2009-10 2008-09 2007-08464899.71 346892.25 280747.60 251369.25 67308.86150152.73 148448.92 100276.58 79494.69 79009.963.10 times 2.34 times 2.80 times 3.16 times 0.85 times 2007-08, 0.85 2011-12, 3.1 2008-09, 3.16 2010-11, 2.34 2009-10, 2.8Interpretation:Fixed assets turnover ratio shows that how much fixed assets were there in thecompany against sales of the company. In 2007-08 it was around 3.16 times of thesales. In 2009-10 it was 2.8 times, in 2011- 12 the fixed assets turnover ratio was3.1 times of its sales. 59
  • 60. (B) Total assets turnover ratio:-SalesTotal assets2011-12 2010-11 2009-10 2008-09 2007-08464899.71 346892.25 280747.60 251369.25 67308.86306216.95 169213.86 130272.83 114982.95 101815.991.52 times 2.05 times 2.16 times 2.19 times 0.66 times 2007-08, 0.66 2011-12, 1.52 2008-09, 2.19 2010-11, 2.05 2009-10, 2.16Interpretation:-Total assets turnover ratio shows the total assets of the company against its sales.In 2007-08 the total assets were 2.19 times of its sales which are good for thecompany. In 2010-11 it was around 2.05% , in 2011-12 the total assets were 1.52times of the sales. 60
  • 61. (C) Debtors turnover ratio:- Debtors ratio: -debtors + Bills receivables*360 Credit sales2011-12 2010-11 2009-10 2008-09 2007-0860268.47+63664.69*360 46867.97+0*360 37631.61+0*360 31870.85+0*360 30790.82+0*360464899.71 346892.25 280747.60 251369.25 67308.8696 days 49 days 48 days 46 days 165 days2011-12 2010-11 2009-10 2008-09 2007-08360 360 360 360 36096 49 48 46 1653.75 times 7.35 times 7.5 times 7.83 times 2.18 times 2011-12, 96 2007-08, 165 2010-11, 49 2009- 2008- 10, 48 09, 46 Interpretation:- Debtor‟s ratio shows that how much debt the company has to recover from the debtors of the company. In 2007-08 debtors turnover ratio was around 2.18 times or more than 160 days in a single year. In 2008-09 it was 46 days; in 2009-10 this ratio was 48 days. In 2011-12 it increases to 96 days. 61
  • 62. (D) Creditors turnover ratio:- Creditor‟s ratio: -Creditors + bills payables *360 Credit purchase2011-12 2010-11 2009-10 2008-09 2007-0866894.25+0*360 28308.34+0*360 49159.76+0*360 29496.17+0*360 37039.33+0*360337931.29 264969.78 172825.69 170428.51 147852.8371 days 38 days 102 days 62 days 90 days2011-12 2010-11 2009-10 2008-09 2007-08360 360 360 360 36071 38 102 62 905.07 times 9.47 times 3.53 times 5.8 times 4 times 2011-12, 71 2007-08, 90 2010-11, 38 2008-09, 62 2009-10, 102 Interpretation:- The above ratio shows credit period which the company gave to its creditors. In 2007-08 this ratio was around 90 days. It reaches to 71 days in 2011-12. In 2008- 09 the creditor‟s ratio was 62 days; in 2009-10 it was 102 days. 62
  • 63. (E) Stock turnover ratio:- COGS Average stock2011-12 2010-11 2009-10 2008-09 2007-08369614.42 290534.15 194406.49 190309.75 165687.8120683.7 19856.58 11395.63 10059.92 9833.6117.87 times 14.63 time 17.06 times 18.92 times 16.85 times 2007-08, 16.85 2011-12, 17.87 2008-09, 18.92 2010-11, 14.63 2009-10, 17.06 Interpretation:- Stock turnover ratio shows that how much stock were being turnover in one year. In 2007-08 the stock turnover ratio of the company was 16.85 times. In 2008-09 the turnover ratio was 18.92 times; in 2009-10 it was 17.06%. In 2011-12 the ratio was 17.87 times. This ratio of the company is very good for the company. 63
  • 64. 5. Coverage Ratio:- (A) Debt Service coverage ratio: -P.A.D.P. Installment+ interest2011-12 2010-11 2009-10 2008-09 2007-0824693.94 13501.08 24946.07 11615.74 23853.4443891.61 -24358.83 14290.45 -24652.55 -20845.20.56 times 10857.75 times (loss) 1.75 times 13036.81 times(loss) 3008.24 times 2007- 2011-12, 0.56 08, 3008.24 2010- 11, 10857.75 2008- 09, 13036.81 2009-10, 1.75 Interpretation:- This ratio show that how much debt covered by the company in one year. Debt service coverage ratio shows that how much debt the company recovers in the last five year. In 2007-08 the debt coverage ratio of the companywas3008.24 times. In 2011-12 it was around to 0.56 times which is very low in the five year. In 2008-09 the company has a loss of 13036.80 times of its profit. 64
  • 65. (B)Interest coverage ratio: -EBIT Interest2011-12 2010-11 2009-10 2008-09 2007-0819731.04 3717.22 23899.65 3324.19 2426.995693.88 6552.56 5683.13 7849.52 15600.780.16 times 0.42 times 4.21times 0.57 times 3.47 times 2011-12, 0.16 2010-11, 0.42 2007-08, 3.47 2009-10, 4.21 2008-09, 0.57 Interpretation:- Interest coverage ratio shows the company‟s interest recovery from the creditors. In 2007-08 it was 3.47 times, in 2011-12 it was around to 0.16 times or in 2009-10 this ratio of the company was 4.21 times which is very high. 65
  • 66. Chapter-8Recommendation & Suggestion 66
  • 67.  Recommendation & Suggestion:-Based on the financial analysis of the CEAT TYRE LTDCompany;We recommend that;  CEAT TYRE is a very well-known tyre company in the market, the overall performance of the company is very good in the market.  Company‟s financial condition is not good in the year 2010-11 because the company had made a loss of almost 16 %.  Company‟s management is poor in some department like production, marketing.  Company‟s financial expenses are too much high in the last five years.  Company had taken loans from many public sector & private sector banks. 67
  • 68. Chapter-9 Contemporary issues inAccounting of the Company 68
  • 69. (1) Basis of preparation of Consolidated Financial Statement:-The consolidated financial statements are drawn up by using accounting policies asdisclosed in the notes below and are prepared to the extent possible in the samemanner as the Company‟s individual financial statements.(2) Fixed Assets & Intangible Assets:-Fixed Assets are stated at cost / revalued cost wherever applicable. Cost comprisesof cost of acquisition, cost of improvements,borrowing cost and any attributablecost of bringing the asset to the condition for its intended use. Cost also includesdirect expenses incurred up to the date of capitalization / commissioning.Intangible Assets are reflected at the cost of acquisition of such Assets & arecarried at Cost less accumulated amortization & impairment, if any. Leased Assetscomprise of assets acquired under Finance Leases which have been stated at cost ofacquisition plus entire cost component amortizable over the useful life of theseassets.(3) Borrowing cost:-Borrowing costs include interest, fees and other charges incurred in connectionwith the borrowing of funds and is considered as revenue expenditure for the yearin which it is incurred except for borrowing costs attributed to the acquisition /improvement of qualifying capital assets and incurred till the commencement ofcommercial use of the asset and which is capitalized as cost of that asset. 69
  • 70. (4) Depreciation:-Depreciation is provided on the Straight Line Method, at the rates prescribed inSchedule XIV to the Companies Act, 1956.Certain Plants have been treated asContinuous Process Plants based on technical and other evaluations.Leasehold land is amortized over the period of the lease. Software expenditure hasbeen amortized over a period of three years.Technical Know-how and Brands are amortized over a period of twenty years.In case of a subsidiary company, depreciation is provided for on a straight linebasis at such rates as will write off various cost of the assets over the period oftheir expected useful lives. The principle annual rates of depreciation used are asfollows:Buildings - 5%Plant & Equipment - 5 to 20%Motor vehicles - 20%The depreciation charge in respect of the subsidiary company is not significant inthe context of the Consolidated FinancialStatements. 70
  • 71. (5) Impairment of Assets:-Subsidiary Companies: at each reporting date an assessment is made as to whetherthere is an indication that an Assetmay be impaired. Where the carrying amount ofan Asset exceeds its recoverable amount, the Asset is considered impaired and iswritten down to its recoverable amount. In assessing value in use, the estimatedfuture Cash Flows are discounted to their present value using a pre tax discountrate that reflects current market assessments of the time value of money and therisk specific to the Asset. An impairment loss is reversed if there has been a changein the estimate used to determine the recoverable amount.(6) Investments:-Investments being long term are stated at cost. Provision against diminution in thevalue of investments is made in case diminution is considered as other thantemporary, as per criteria laid down by the Board of Directors after consideringthat such investments are strategic in nature.Current Investment is stated at lower of cost or fair value.In respect the subsidiary Company the Investment is stated at Cost less provisionfor diminution in value if any.Investment in associate company is accounted as per the „Equity method‟, andaccordingly, the share of post-acquisitionreserves of each of the associatecompanies has been added to / deducted from the cost of investments. 71
  • 72. (7) Inventories:-Raw materials, Stores and spares and Stock-in-process are valued at weightedaverage Cost. Finished Goods are valued at lower of cost or net realizable value.Material-in-transit is valued at cost.(8) Revenue Recognition:-Gross Sales include excise duty and are net of trade discounts / sales returns / salestax.Interest is accounted on an accrual basis.Dividend is accounted when right to receive payment is established.(9) Export Incentive:-Export Incentives are recognized in the year of entitlement and credited to the RawMaterial Consumption Account.(10) Government Grants:-Grants relating to Fixed Assets are reduced from the cost of Fixed Assets andGrants related to revenue are shown separatelyas part of Other Operating Income. 72
  • 73. (11) Foreign Currency Transactions:-Foreign currency transactions other than those covered by forward contracts arerecorded at current rates.Forward premier in respect of forward exchange contracts are recognized over thelife of the contract.Monetary Assets and Liabilities denominated in foreign currency are restated atyear-end rates.All exchange gains and losses arising out of transaction/restatement, are accountedfor in the Profit and Loss Account.The financial statements of the consolidated foreign subsidiary are translated inIndian Rupees, which is the functional currency of the company, as follows:Assets and liabilities at rates of exchange ruling at year end.Exchange rate differences arising on the translation of consolidated foreignsubsidiary is transferred to the Foreign CurrencyTranslation Reserve.(12) Lease rentals:-The cost components in respect of Finance leases is being amortized over theprimary lease period or effective life of the Assets as depreciation on LeasedAssets and the interest component is charged as a period cost.Secondary Lease rentals are being charged to Profit and Loss Account. 73
  • 74. Leases that do not transfer substantially all the risks and rewards of ownership areclassified as operating leases and recognized as expenses as and when payment aremade over the lease term.(13) Research and Development:-Revenue expenditure on research and development is recognized as an expense inthe year in which it is incurred.Capital expenditure is shown as an addition to the fixed assets and are depreciatedat applicable rates.(14) Employee Benefits:-a) Defined Contribution planContribution to Defined Contribution Schemes such as Provident Fund,Superannuation, Employees State Insurance Contribution and Labor Welfare Fundare charged to the Profit and Loss account as and when incurred.b) Defined Benefit planThe Company also provides for retirement / post-retirement benefits in the form ofgratuity and Leave encashment. Company‟s liability towards these benefits isdetermined using Project Unit Credit Method. These benefits are provided basedon the Actuarial Valuation as on Balance Sheet date by an Independent actuary.c) Short term benefits are recognized as an expense in the profit and loss accountof the year in which the related service isrendered. 74
  • 75. d) Long term leave benefits are provided as per actuarial valuation as on BalanceSheet date by an independent actuary usingproject unit credit method.e) Termination benefits are recognized as an expense as and when incurred.f)In respect of foreign subsidiary, the provision for gratuity has been made as perSri Lankan Accounting Standard 16 –Employee Benefit. Expenditure in respect ofSubsidiary is not significant in the context of the consolidation offinancialstatements.(15) Taxes on Income:-a) Current Tax:Current Tax is determined in accordance with the provisions ofIncome Tax Act, 1961.b) Deferred Tax Provision: Deferred tax is recognized on timing differencesbetween the accounting income and the taxable income for the year, and quantifiedusing the tax rates and laws enacted or substantively enacted on the Balance Sheetdate. Deferred tax assets are recognized and carried forward to the extent that thereis a reasonable certainty that sufficient future taxable income will be availableagainst which such deferred tax assets can be realized. 75
  • 76. Chapter-10Bibliography 76
  • 77. www.moneycontrol.comwww.ceatltd.comR. Narayan swami 77
  • 78. Chapter-11Annexures 78
  • 79. 79
  • 80. 80
  • 81. 81

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