A FINANCIAL REPORT ON Panasonic Energy India co. Ltd.

1
A
FINANCIAL REPORT
ON
Panasonic Energy India co. Ltd.
PROJECT GUIDE:
PROFESSOR SWENEE SHAH
SUBMITTED BY:
NAME : HARDIK JAYESHKUMAR SHAH
ROLL NO. : 185
CLASS : S.Y. B.B.A
DIVISION: C
SUBMITTED TO:
GLS INSTITUTE OF BUSINESS ADMINISTRATION
LAW GARDEN.

2
ACKNOWLEDGEMENT
I feel great pleasure to present the financial report on ‘Panasonic
Energy India co. Ltd.’ before you.
Certainly I should acknowledge the contribution of Almighty god,
whose blessing let this report to be fulfilled without any problems.
I am highly thankful to our directors sir for providing me an
opportunity to prepare the reports Shree V.B. Patel & Prof. Swenee Shah
for guidance and supports.
Lost, but not the least. I am grateful to Gujarat University a part of the
curriculum of the B.B.A. programmer, without which we would have not
experience of real business environment.
SHAH HARDIK J.
Class : S.Y.B.B.A.
Division : C
Roll No. : 185

3
PREFACE
B.B.A. is a course where unlike other courses practical studies
accomplished together with theoretical studies. Concluding industrial part
is a part of B.B.A. Preparing on “Panasonic Energy India co. Ltd.
” gave us a great in sight above how company operates in the
Economic environment national as well as international. We got to know
managerial & Financial practices and operations with a close security.
It was an amazing experience for us to get the information about such
a large Co. The report presents the financial condition of the company,
about its profits and expenses. Hence, this report serves well the purpose of
practical studies as a part of B.B.A. program.

5
HISTORY OF THE COMPANY
The Panasonic brand name was created in 1955 and
was first used as a brand for audio speakers. It is a
combination of the words, "Pan", and "Sonic", sound
and has a meaning of bringing sound our Company
creates to the world.
Many distributors, sensing future potential in the company,
expressed the desire to deal primarily in National brand products. The
company's responsibility to provide security to its distributors was now
greater than ever before.
Matsushita, who had considered the company primarily a
private endeavor, now needed to view it in terms of its relation to the
society at large. They are therefore duty-bound to manage and develop the
company in an upstanding manner, contributing to the development of
society and to the improvement of people's lives. The profits of their
business are a reward for contributing to society."

6
YEAR EVENTS
1972 - The company was incorporated on 24th May, at Vadodara. The
Company was promoted by Shri D.D. Lakhanpal and Matsushita
Electric Industrial Co. Ltd. Japan.
D.D. Lakhanpal entered into a joint venture agreement
(Technical and financial) with Matsushita Electric Industrial
Co. Ltd. ,Japan.
1973 - 1,66,666 shares taken up by promoters, directors, etc., and
2,50,000 shares allotted to Matsushita Electric Industrial
Co. Ltd., Japan without payment in cash. 2,08,334 shares
offered At par to the public in January 1973.
1979 - 825 shares forfeited in 1979 and were reissued to employees
At par.
1981 - 5,00,000 Right Equity shares issued at par in prop. 4:5.
1986 - The Company received a letter of intent for the manufacture
Of 2,200 lakh pieces of dry batteries per annum with zinc
Chloride technology.
1987 - The Company proposed to introduce UM3 type (pencil batteries
And later UM1 type (standard type) batteries with the new
Technology.
11,25,000 bonus equity shares issued in prop. 1:1.
1989 - UM 3D (NOVINO GOLD) batteries were introduced.
The company offered 22,50,000 No. of equity shares of Rs 10
Each for cash at par on `Rights basis' in the proportion 1:1 (all
Were taken up).

7
Another 1,12,500 No. of equity shares were issued to
employees.
(Only 42,750 shares taken up). In addition, 28,500 No. of
Equity shares were allotted to the Company's collaborators
Matsushita Electric Industrial Co. Ltd., to maintain their
Equity participation at the existing level of 40%.
1990 - The unsubscribed portion of 69,750 No. of equity shares out
Of the employees’ quota were allotted at par to the employees.
On account of this, another 46,500 No. of equity share were
Allotted at part to the collaborators Matsushita Electric
Industrial Co. Ltd., Japan to maintain their shareholding in the
Company at 40%.
1991 - The Company proposed to expand the existing production
Capacity by establishing new plant and machinery to
manufacture Hi-tech Eco-Friendly, Mercury free, UM-3 (R-6)
Type of Metal Jacketed Penlight Dry cell batteries.
1994 - During the year, superior quality NOVINO SUMO-UM-IS (R-
20) batteries and PANASONIC Alkaline batteries were
introduced.
The Company introduced superior quality and cost effective
Novino Sumo-UM-2S (R-^) Penlight type of dry cell battery
with Zinc Chloride technology. The company also introduced
Panasonic Brand alkaline batteries.
The company offered 8,43,750 No. of equity shares of Rs 10
Each At a premium of Rs 33 per share in `Rights basis' in the
Proportion of 3:10 (all were taken up). Simultaneously
Another 19,50,000 shares offered to collaborators Matsushita
Electric Industrial Co. Ltd. Japan (All were taken up). Another
18,750 Shares offered to Indian promoter (All were taken up).
1995 - The Company started implementation of ambitious gas lighter

8
Project.
1996 - The Company introduced New Novino UM-IPN (R-20) type of
dry Cell Battery in paper jacket section.
2008 - Company name has been changed from Panasonic Battery India
Co.Ltd. To Panasonic Energy India Company Ltd.

9
 Name:
For 90 years since establishment, the name of the company
was always topped with "Matsushita". The company's name before 1
October 2008 was referred to as "Matsushita Electric Industrial Co., Ltd.",
used since 1935.
In 1927, the company founder adopted a brand name
"National” for a new lamp product,Knowing "national" meant "of or
relating to a people, a nation." In 1955, the company labeled its export
audioSpeakers and lamps "PanaSonic", which was the first time it used its
"Panasonic" brand name.began to use a brand name "Technics" in 1965.
The use of multiple brands lasted for some decades.
In May 2003, the company announced "Panasonic" as its
global brand, and set its global brand slogan, "Panasonic-ideas for life."
The company began to unify its brands to "Panasonic" and, by March 2004
replaced "National" for products and outdoor signboards, except for those
in Japan.
On January 10, 2008, the company announced that.
(effective on October 1, 2008) and phase out the brand.”National" in Japan,
replacing it with the global brand "Panasonic" (by March 2010). The name
change was approved at a shareholders' meeting on June 26, 2008 after
consultation with the Matsushita family.
Panasonic was founded in 1918 by Konosuke Matsushita
first selling duplex lamp sockets. In 1927, it produced a bicycle lamp, the
first product it marketed under the brand name National. It operated
factories in Japan and other. Parts of Asia through the end of World War II,
producing electrical components and appliances such as light fixtures,
motors, and electric irons. After World War II, Panasonic regrouped and
began to supply the post war boom in Japan with radios andAppliances, as
well as bicycles. Matsushita's brother-in-law, Toshio Iue founded Sanyo as
a subcontractor for components after WWII. Sanyo grew to become a
competitor to Panasonic, but the rivalry settled down and Sanyo were soon
to be a subsidiary of Panasonic in December 2009.

10
 Panasonic Corporation :
 Revenue US$ 104.88 billion (2011)
 Operating income US$ 3.68 billion (2011)
 Profit US$ 893 million (2011)
 Total assets US$ 94.38 billion (2011)
 Total equity US$ 30.87 billion (2011)
 Employees 365,899 (2011)
 Divisions Sanyo
 Subsidiaries Panasonic EV Energy Co
 Website Panasonic.net
 REGISTERARS :
 Name: Link in time India Pvt. Ltd.
 Address: 308, 1st
Floor, jaldhara complex,
Opp.manisha society,
Old padre road
Vadodara - 390 015

 TREND ANALYSIS :
YEAR 2008-2009 2009-2010 2010-2011
SALE 17,70,404 19,97,225 19,82,759
NET SALE 15,29782 16,89219 1752629
NET
PROFIT
96,604 71,974 55,032
PBT 106534 62267 78075
PAT 96604 71878 55824
INTEREST 1,881 1,743
DIVIDEND 7,500 22,500

12
 List of Directors :
 Name of Person Designation
 Mr.A.K. Lakhanpal Chairman
 Mr.S.K. Khurana Managing Director
 Mr.E.B. Desai Director
 Mr.P.P. Shah Director
 Mr.D.J. Thakkar Director
 Mr.G.N. Punj Director
 Mr.H.Ogami Director
 Mr.H. Sugimura Director
 Mr.M. Kurokawa Director
 Mr.H. Aota Director
 Ms.Nisha Hindocha Company Secretary
 Auditors: M/S. K. C. Mehta & Co.
Chartered Accountants
Vadodara
 Solicitors: Mulla & Mulla and Craigie Blunt & Caroe
 Bankers: State Bank of India
The Bank of Tokyo – Mitsubishi UFJ, Ltd

13
Introduction to Finance
Finance is the study of funds and management. Its general
areas are business finance, personal finance, and public finance. It also
deals with the concepts of time, money, risk, and the interrelation between
the given factors. It is basically focused on how the money is spent and
budgeted. It is one of the most important aspects in handling business.
Finance addresses the methods wherein business entities used their
financial resources on a certain period of time. It is the application of a set
of techniques used by organizations in managing their financial affairs. The
income and expenditure are emphasized in finance and its differences can
easily be indicated.
The investor can now collect all the interests and be sold
again through a secondary market. Banks serve as facilitators to companies
in the provision of credit and mutual funds. Investments are managed
carefully under a financial risk management to control gambling chances of
these financial assets. Financial instruments are also used to secure these
assets on securities exchanges such as stock exchanges and bonds. A bank
provokes the activities of both borrowers and lenders. Lenders pay deposits
to banks on which it pays the interest rates. The central banks are the last
resorts that handle the monetary funds. These banks affect the interest rates
being charged such as an increase in the money supply will result to a
decrease in the interest rates. Studying finance will lead you in wiser
decisions making on your financial funds. It can help you identify risks and
benefits if you are planning to put up your own business. Finance discipline
requires you certain abilities and trainings which can be developed over a
period of time. Finally, it will give you optimum control over your financial
assets which will certainly help you in attaining a financially secured life.


14
Meaning of Financial Management
Financial Management means planning, organizing,
directing and controlling the financial activities such as procurement and
utilization of funds of the enterprise. It means applying general
management principles to financial resources of the enterprise.
Financial management is that managerial activity which is
concerned with the planning and controlling of the firm's financial
resources. Planning, directing, monitoring, organising and controlling of the
monetary resources of an organization.
There are 3 important decisions involved...
1. Financing or where do u get money from
2. Investing or where do we allocate funds
3. Dividend or how much to distribute and what to retain.

15
Scope of Financial Management
In order to achieve the objectives of the financial
management, the financial manager of the business concern, has to manage
various aspects of finance function which lay down the scope of his duty.
These aspects are discussed as under:
1. Estimating the financial requirement.
2. Determining the structure of capitalization.
3. Selecting a source of finance.
4. Selecting a pattern of investment.
5. Management of cash flow.
6. Implementingfinancial control.
7. Proper use of surplus.
1. Estimating the financial requirement: on the basis of their forecast of
the volume of business operations of the company, the finance executives
have to estimate the amount of fixed capital and working capital required in
a given period of time
2. Determining the structure of capitalization: after estimating the
requirement of capital, the finance executives have to decide about the
composition of capital. They have to determine the relative proportion of
owner’s risk, capital and borrowed capital. These decisions have to be
taken in the light of cost of raising form different resources, period for
which funds are needed and several others factors.
3. Investment decision: the funds raised from different resources are to be
intelligently invested in various assets so as to optimize their return of
investment. While making investment decision, management should be
guided by three important principles-safety, liquidity and profitability.
4. Management of cash flows: - Cash is needed to pay off creditors, for
purchase of materials, pay labor and to meet everyday expenses. These

16
should not be shortage of cash at any time as it will damage credit-
worthiness of the company. These should not be access cash them required
because money has
time value.
5. Management of earnings: - The finance executive has to decide about
the allocation of earnings among several competitive needs. A certain
amount of total earnings may be kept as reserve or a portion of earnings
may be distributed among and ordinary and preference share holders, yet
another portion may be ploughed back or re-invested. The finance
executives must consider the merits and de-merits of alternative schemes of
utilizing the funds generating from the companies own earnings.

17
Directors Report Year Ended on
Mar '11
Dear Shareholders,
The Directors have pleasure in presenting their 39th Annual
Report Together with the Audited Annual Accounts of the Company for the
year Ended 31st March 2011.
1. FINANCIAL RESULTS
(Rs. In lacks)
As at As at
Particulars 31-March-11 31-March-10
Sales Turnover 19828 18645
Profit/ (Loss) Before Tax 781 623
Less: Provision for taxa
tion (Net of deferred tax) 223 (96)
Less: Provision for taxation
of earlier years (Net of ref
und/demand) 8 (1)
Profit/(Loss) After Tax 550 720
Add: Profit brought forward
From previous year 100 1
Net available surplus for

18
appropriation650 721
Appropriations
Proposed dividend 150 150
Dividend distribution tax 24 25
General Reserve No.1 (Sta
tutory) 42 54
General Reserve No. 2 284 392
Surplus carried to Balance
Sheet 150 100
650 721
2. OPERATIONAL REVIEW
The Profit before Tax (PBT) of the Company increased by 25% and it
Stands at Rs. 781 lacks as compared to the previous year of Rs. 623
Lacks. The Company’s turnover for the year stood at Rs. 19828 lacks,
Which has increased by 6% as compared to the previous year. The sales
Quantity has increased by 9% as compared to previous year. The major
Factors that contributed to the profits of the Company are increased
Turnover, several cost reduction measures such as value engineering,
Etc.
During the year your Company has launched a new improvised product in
The D & C size of batteries (R20 & R14). These are eco friendly
Product i.e. mercury free batteries. We take lot of pride in these
Improvised batteries as we are the only manufacturer in India with eco
Friendly products in this segment. These eco friendly products could
Not have seen the light of the day without the technological support
And guidance from our foreign collaborators (Panasonic Corporation,

19
Japan) for development and manufacturing of these batteries. With the
launch of these new improvised R20 & R14 eco friendly batteries, now
yourCompany''s complete range of product is eco friendly. These new
improvisedeco friendly products were launched under the Panasonic
brand and with this, now all the batteries manufactured by your Company
are sold under one brand Panasonic, which is a globally renowned
brand. Panasonic brand is recognized by the customers across the
globe as best quality products.
During the year, various marketing activities of the Company were
focused towards brand unification. These activities mainly includes
Display In Shop Activities (DISHA) & District Development Plan. Your
Company also focused on high potential key urban markets under its Town
Development Plan. Also various awareness programs were organized by
the
Company for its sales force in order to make them aware about the new
improvedeco friendly products of the Company, their importance in
protecting our environment and in turn to the society as a whole. With
the help of these activities, under a highly competitive market your
Company has been able to marginally increase its market share as
compared to last year.
It gives us immense pleasure in informing you that a new milestone was
achieved by your Company. In the history of the Company for the first
time, we reached mark of 500 million plus dry battery production and
sales.
During the year, another milestone was also reached by your Company, we
crossed 10 billion cumulative production of dry batteries.
3. DIVIDEND
In view of the improved operational profits of the Company, your
Directors are happy to recommend dividend at Rs. 2.00 per equity share
(previous year Rs. 2.00 per equity share) on 75,00,000 equity shares
for the year ended 31st March, 2011. The dividend, when approved, will
entail payment to shareholders of Rs.150 lacs. It will be tax free

20
income in the hands of recipients and the Company will have to pay
dividend distribution tax thereon to the sum of Rs. 24 lacs.
5. DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors state that:
a. in the preparation of the annual accounts, all applicable
accounting standards have been followed;
b. accounting policies as listed out in schedule 19 to the financial
statements have been selected and applied consistently and are
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs of the Company as on
31st March, 2011 and of the profit of the Company for the year ended on
that day;
c. proper and sufficient care for maintenance of adequate accounting
records has been taken in accordance with the provisions of the Act, so
as to safeguard the assets of the Company and to prevent and detect
fraud and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
6. CORPORATE GOVERNANCE
Your Company recognizes the importance and need of good corporate
governance as an important step in creating shareholders confidence and
thereby enhancing the long term enterprise value.
Pursuant to clause 49 of the listing agreement with stock exchange the
Corporate Governance Report along with Auditors certificate regarding
compliance of the conditions of corporate governance are given as part
of this Annual Report.

21
7. DEPOSITS
During the year under review the Company has not accepted/renewed
deposits from public/shareholders. 1 (one) deposit amounting to Rs.
10,000/- matured but not claimed by the depositor and remained
unclaimed over a period of seven years, has been transferred to
Investor Education & Protection Fund (IEPF) of Central Government
during the year. As on 31st March, 2011 there are no matured /
unclaimed deposits with the Company.
8. STATEMENT PURSUANT TO LISTING
AGREEMENT
Equity shares of the Company are listed at Bombay Stock Exchange Ltd.
(BSE). The Company has already paid annual listing fee for the year
2011-12 to the stock exchange.
9. DIRECTORS
During the year under review, Mr. E. B. Desai, Director of the Company
passed away on 24th December, 2010. Mr. Desai had been on the Board of
your Company since 1973. The fact that his association with your
Company had been for more than 3 decades endorses the fact that he
played a significant role in contributing to the development and growth
of the Company. He was an eminent lawyer with thorough knowledge and
understanding of corporate laws which was beyond compare. His death has
caused a void that would be difficult to fill in. We on behalf of the
entire Panasonic family place on record our heartfelt condolences to
his family members and pray to the almighty to give them enough
strength to withstand the pain and personal loss and may his soul rest
in peace.
During the year, Mr. Chirayu Amin was appointed as Director w.e.f. 25th
January, 2011 in order to fill in the casual vacancy caused due to Mr.
Desai''s death. Mr. Amin is a well known Industrialist. I, on behalf of

22
the Board of Directors of the Company whole heartedly welcome him and
we are sure that his association would be of immense benefit to your
Company in the coming years.
Mr. D. J. Thakkar and Mr. G. N. Punj retire by rotation and, being
eligible, offer themselves for reappointment. The Board recommends
their reappointment.
10. AUDITORS
M/s. K. C. Mehta & Co., Chartered Accountants, Vadodara retire, and
being eligible, offer themselves for reappointment.
11. ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation to Panasonic
Corporation, Japan for their valuable support and co-operation. We also
wish to thank the State and Central Govt. authorities, suppliers and
bankers for their continuous co-operation. We also value the support
that we received from our stockiest, wholesale dealers, retailers and
consumers.
The Directors also wish to place on record their sincere thanks to the
Shareholders for the confidence reposed by them in the Company.
For and on behalf of the Board
Ajai K. Lakhanpal
Chairman

23
AUDITOR’S REPORT
1. We have audited the attached Balance Sheet of Panasonic Energy
India Company Limited as at 31st March, 2011 and also the Profit and
Loss Account and Cash Flow Statement of the Company for the year
ended
on that date annexed thereto. These financial statements are the
responsibility of the Company''s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor''s Report) Order, 2003, issued
by the Central Government of India in terms of section 227(4A) of the
Companies Act, 1956 and on the basis of such checks as we considered
appropriate and according to the information and explanations given to
us, we enclose in the Annexure a statement on the matters specified in
paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
a. we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;

24
b. in our opinion, proper books of accounts as required by the law
have been kept by the company so far as appears from our examination of
the books;
c. the Balance Sheet, Profit and Loss account and Cash Flow Statement
dealt with by this report are in agreement with the books of accounts;
d. in our opinion, the Balance Sheet, Profit & Loss Account and Cash
Flow Statement dealt with by this report are in compliance with
Accounting Standard referred to in Section 211(3C) of the Companies
Act, 1956, to the extent applicable;
e. on the basis of the written representations received from the
Directors of the Company, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2011 from being appointed as a Director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act,1956;
f. in our opinion, and to the best of our information and according to
the explanations given to us, the said accounts read together with the
notes thereon give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with accounting principles generally accepted in India:
i. in the case of Balance Sheet, the state of affairs of the company as
at 31st March, 2011;
ii. in the case of Profit and Loss Account, of the profit for the year
ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
(ANNEXURE TO THE AUDITORS'' REPORT) (referred to in paragraph
(3)
thereof)

25
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a regular program of physical verification of fixed
assets which, in our opinion is reasonable. The assets which were to be
covered as per the said program have been physically verified by the
management during the year. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.
(c) The Company has not disposed off a substantial part of its fixed
assets during the year and therefore, do not affect the going concern
assumption.
ii. (a) During the year, the inventories have been physically verified
by the management except for inventory lying with third parties where
confirmations have been received in most of the cases. In our opinion,
the frequency of verification is reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventory and
according to the information and explanations given to us, we are of
the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stock and the book records were not material.
iii. According to the information and explanations given to us, the
Company has not granted / taken any loans, secured or unsecured to /
from companies, firms or other parties covered in the register

26
maintained under section 301 of the Companies Act,1956 and therefore,
the provisions of clause (iii) of the Order are not applicable to the
Company.
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and nature of its business with regard to
purchase of inventories and fixed assets and sale of goods. Further on
the basis of our examination and according to the information and
explanations given to us, we have neither come across nor have been
informed of any instance of major weaknesses in the aforesaid internal
control system.
v. (a) To the best of our knowledge and belief and according to the
information and explanations given to us, we are of the opinion that
the particulars of contracts or arrangements referred to in section 301
of the Companies Act, 1956 have been entered in the register required
to be maintained under that section.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the registers maintained under section 301 of
the Companies Act, 1956 and exceeding the value of Rs.5 lacs in respect
of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.
vi. The Company has not accepted any deposits during the year from the
public within the meaning of provisions of section 58A and 58AA of the
Companies Act,1956 and the rules framed there under and therefore, the
provisions of clause (vi) of the Order are not applicable to the
Company.
vii. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.

27
viii. We have broadly reviewed the books of account and records
maintained by the Company pursuant to the rules prescribed by the
Central Government for the maintenance of cost records under section
209(1)(d) of the Companies Act, 1956 in respect of material, labour&
other items of cost and are of the opinion that prima facie the
prescribed accounts and records have been made and maintained. We have,
however, not made a detailed examination of the records with a view to
determining whether they are accurate or complete.
ix. (a) The Company has been regular in depositing with appropriate
authorities undisputed statutory dues, including provident fund,
investor education and protection fund, employee''s state insurance,
income- tax, sales-tax, wealth tax, service tax, custom duty and other
material statutory dues applicable to it. According to the information
and explanations given to us, no undisputed amounts payable in respect
of income tax, sales tax, wealth tax, service tax, custom duty and
excise duty were in arrears, as at 31st March, 2011 for a period of
more than six months from the date they become payable.
(b) According to the information and explanations given to us, and the
records of the company examined by us, the particulars of income tax,
excise, sales tax and service tax as at 31st March, 2011 which have not
been deposited on account of dispute pending are as under:
Nature of Amount Period to which
dues (in Rs.''000) the amount related
Service Tax 104 2004-2005
Income tax 1,557 1999-2000
254 1996-97
14,510 2006-07

28
Central
Excise 6,794 September 2004 to
March 2010
Sales Tax 16,245 1986 to 2008-09
Nature of Forum where pending
dues
Service Tax Assessing Authorities and First Appellate Authority
Income tax CIT Appeals
CIT Appeals
CIT Appeals
Central Assistant Commissioner, Commissioner Sales tax
Excise Tribunal, Commissioner of Sales Tax (Appeals), Dy.
Commissioner of Commercial Tax at different Jurisdiction.
x. In our opinion and according to information and explanations given
to us, the Company does not have any accumulated losses as at the end
of the year. The Company has not incurred cash losses during the
financial year and in immediately preceding financial year.
xi. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
banks. The Company has not obtained any borrowings from financial
institutions or by way of debentures.
xii. According to the information and explanation given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities and therefore,

29
the provisions of clause (xii) of the Order are not applicable to the
Company
xiii. In our opinion and according to information and explanations
given to us, the Company is not a chit fund or a nidhi / mutual benefit
fund society and therefore, the provisions of clause (xiii) of the
Order are not applicable to the Company.
xiv. In our opinion and according to the information and explanations
given to us, the Company is not dealing in or trading in shares,
securities, debentures and other investments and therefore, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institutions and therefore, the provisions of
clause (xv) of the Order are not applicable to the Company.
xvi. According to the information and explanations given to us, the
Company did not have any term loans outstanding during the year and
therefore, the provisions of clause (xvi) of the Order are not
applicable to the Company.
xvii. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that the funds raised on short term basis have not been used for long
term investment.
xviii. The Company has not made any preferential allotment of shares to
companies/firms/parties covered in the register maintained under
section 301 of the Companies Act, 1956 and therefore, the provisions of
clause (xviii) of the Order are not applicable to the Company.
xix. According to the information and explanations given to us, during
the period of audit the Company has not issued any secured debentures
and therefore, the provisions of clause (xix) of the Order are not

30
xx. The Company has not raised any money by public issues during the
year and therefore, the provisions of clause (xx) of the Order are not
xxi. According to information and explanations given to us, no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For K. C. Mehta & Co.
Chartered Accountants
Firm''s Registration No.106237W
Vishal P. Doshi
Partner
Membership No. 101533

31
RATIO ANALYSIS
Meaning, Importance, Classification of Ratios:
Meaning of Ratio analysis-
Ratio analysis is a very important tool of financial analysis. It is the
process of establishing a significant relationship between the items of
financial statements (profit and loss a/c and balance sheet) to provide a
meaningful understanding of the performance and financial position of the
firm.
Meaning of Ratios-
Ratio may be defined as, the mathematical expression of the relationship
between two accounting figures. But these figures must be related to each
other (i.e. figures must have cause and effect relationship) to produce a
meaningful and useful ratio.
ADVANTAGE AND USES OF RATIO ANALYSIS:
There are various groups of people who are interested in analysis of
financial position of the company. They use the ratio to work out a
particular financial characteristic of the company in which they are
interested. Ratio analysis helps the various groups in the following manner:
1. TO KNOW ABOUT THE PROFITABILITY- accounting ratios
help to measure the profitability of the business by calculating
various profitability ratios. It helps the management to know about
the earning capacity of the firm.
2. TO KNOW ABOUT THE SOLVENCY- with the help of solvency
ratios, solvency of the company can be measured. These ratios
show the relationship between the assets and liability. In case,
external liabilities are more than the assets, it shows the unsound

32
position of the business. In this case, the firm has to make it
possible to repay its loans.
3. HELPFUL IN ANALYSIS- ratio analysis help the outsiders just
like creditors, shareholders, debenture holders, bankers to know
about the profitability and ability of the firm to pay them interest,
dividend, etc.
4. HELPFUL IN COMPARATIVE STUDY- with the help of ratio
analysis, a company may have comparative study of its
performance to the previous year. In this way company comes to
know about its weak points and be able to improve them.
5. TO SIMPLIFY THE ACCOUNTING INFORMATION-
accounting ratios are very useful as they briefly summarize the
result of detailed and complicated calculations.
6. TO WORKOUT THE OPERATING EFFICIENCY- ratio analysis
helps to workout the operating efficiency of the company with the
help of various turnover ratios. All turnover ratios are worked out
to evaluate the performance of the business in utilizing the
resources.
7. TO WORK OUT SHORT TERM FINANCIAL POSITIONING-
ratio analysis helps to work out the short term financial positioning
of the company with the help of liquidity ratios. In case short term
financial position is not good than efforts are made to improve it.
8. HELPFUL FOR FORECASTING PURPOSE- accounting ratios
indicate the trend of the business. The trend is useful in estimating
future. With the help of previous year’s ratios, estimates for future
can be made. In this way these ratios provide basis for preparing
budgets and also determine the future line of action.

33
ProfitabiliyRatio
Classificationof
ratio
LiquidityRatio LeverageRatio ActivityRatio CoverageRatio
 GrossprofitRatio
 NetprofitRatio
 Returnoncapital
employedRatio
 Returnonequity
fundRatio
 Returnon
shareholder’sfunds
 OperatingRatio
 ExpensesRatio
 Earningpershare
(EPS)
 Dividendpershare
(DPS)
 PricesEarningRatio
 CurrentRatio
 LiquidRatio
 DebtequityRatio
 ProprietrayRatio
 Capitalgearing
Ratio
 Longtermfundsto
fixedAssetsRatio
 StockturnoverRatio
 TotalAssetsturnover
ratio
 DebtorsRatio
 CreditorsRatio
 Bookvaluesper
shares
 WaitingCapitalturn
overratio
 Deptcoverage
serviceratio
 Interestcoverage
ratio

34
Classification of Accounting Ratios:
The ratios can be classified as follows:
(1) Traditional classification
(2) Functional classification
Traditional classification:
The ratios are grouped into three categories on the basis of the financial
statement from which the figures are taken for computing the ratios. It
is well-known traditional classification and has been so grouped since
the advent of ration analysis.
The ratios according to classifications are:
(a) Revenue statement ratios:
The ratios which are computed on the basis of items taken from
revenue statement i.e. Profit and loss. Net profit ratio is computed by
dividing net profit by sales and multiplying by 100.
(b) Balance sheet ratios:
When two items or groups of items appearing in the balance sheet. Are
compared, the ratio so obtained is a balance sheet ratio. Ration between
current assets and current liability is a balance sheet ratio.
(c) Composite ratio:
A ratio showing the relationship between one items taken from balance
sheet and on e item from profit and loss account is a composite ration
or a combined ratio known as balance sheet ratio and revenue
statement ratio. A return on capital employed shows the proportion of
net profit to capital employed and it is a composite ratio.

Functional classification:
Ratios are also grouped in accordance with certain tests. Such a
Classification is known as functional classification. the ratios according to
this classification are :
1) Profitability Ratios:
Profit is the main objective of any business
enterprise. Besides, profitability is the measure of efficiency. The owners
invest their funds in the expectation of receiving of reasonable return and so
profitability is important from their point of view. Besides, profits provide
money for repaying the debt incurred. Hence, profitability ratios are very
important from the viewpoint of various stakeholders.
2) Activity / Turnover Ratios:
The activity ratio measures the efficiency with which
assets are being used in business. They are also known as Turnover Ratios,
as these ratios show how fast the assets are being turned into sales. Activity
ratio is a test of relationship between sales (or cost of sales) and the various
assets of the firm. Thus, depending on the type of asset in respect of which
the ratio is ascertained.
3) Liquidity Ratios:
These ratios indicate the position of liquidity. They
are computed to ascertain whether the company is capable of meeting its
short-term obligation from its short-term resources. Thus, the ratios
showing the ability of a firm to pay its current liabilities as and when they
mature are liquidity ratios.

4) Leverage Ratios:
Those ratios, which indicate the proportion of
owners’ capital to outside debts or the proportion of fixed income bearing
securities to equity capital, are known as leverage ratios. The long-term
solvency of a company is judged by leverage ratios. These ratios show the
mix of capital provided by the owners and creditors of the company. There
must be a proper combination of owners’ capital and borrowed capital in
any business. The proportion of borrowed capital depends upon the type of
business and a number of factors.

37
PROFITABILITY RATIO:
1. Gross Profit Ratio.
1. Return on Capital Employed
2. Net Profit Ratio.
2. Return on Shareholders fund
3. Expenses Ratio.
3.Return on equity shareholder’s Funds.
4. Operating Ratio.
4. Return on Equity share
5. Earnings per Share
6. Dividend per Share
7.Price earning ratio
8.Interest Coverage ratio
In relation
to Sales.
In relation to
Investments.
Profitability Ratio.

38
Profitability Ratio:
Introduction:
This ratio measures management overall effectiveness as shown by
the returns generated on sales and investment. Usually three types of
profitability ratios are calculated.
1. In relation to sales
2. In relation to investment and
3. In relation to equity shareholders fund

39
1.In Relation To Sales
(1)Gross Profit Ratio:
Meaning-
This ratio shows the relationship between gross profit and net sales.
Objective-
The main objective of computing this ratio is to find out the efficiency with
which production or purchase operations are carried on.
CCoommppoonneennttss::
There are two components of this ratio:
1. Gross profit which is the excess of net sales of over cost of goods sold.
2. Net sales which is gross sales (both cash & credit)-sales return.
CCaallccuullaattiioonn--
This ratio is calculated by dividing the gross profit by the net sales. It is
expressed in terms of percentage. In the form of a formula it can be
expressed as under-
Gross profit ratio= Gross profit * 100
Net sales
Particulars 2008-2009 2009-2010 2010-2011
C.O.G.S. 144545 116933 1108045
Sales 1529782 1689219 1752629

CCaallccuullaattiioonn ooff 33 yyeeaarrss::
2008 - 2009 =
465232
1529782
× 100=30.41%
2009 - 2010 =
667244
1689216
× 100 = 39.50%
2010 - 2011 =
645986
1752629
× 100= 36.86%
30.41
39.50
36.86
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
2008 - 2009 2009 - 2010 2010 - 2011
Gross Profit Ratio
IInntteerrpprreettaattiioonn::
2008-2009 ratio is 30.41% it shows Higher profitability of the company .
2009-2010 ratio is 39.5% it shows profitability is increased. In 2010-2011
ratio is 36.83%.we show that the gross profit of the company is increase or
decrease in this three year.

41
(2) Net Profit Ratio:
Meaning-
This ratio measures the relationship between net profit and net sales.
Objective-
The main objective of computing this ratio is to determine the overall
profitability due to various factors such as operational efficiency, trading on
equity.
CCoommppoonneennttss--
There are two components of this ratio.
1. Net profit
2. Net sales
This ratio is calculated by dividing the net profit by the net sales. It is
expressed in percentage. In the form of a formula this may be expressed as
under-
Net profit ratio= Net profit * 100
Net sales
Year 2009 2010 2009-10
Net profit 96604 71974 55032
Net sales 1529782 1689219 1752629
Net profit ratio 6.31% 4.26% 3.14%

2008 -2009 =
96604
1529782
× 100 = 6.31%
2009 – 2010 =
71974
1689219
× 100 = 4.26%
2010 – 2011 =
55032
1752629
× 100= 3.14%
6.31
4.26
3.14
0
1
2
3
4
5
6
7
2008 - 2009 2009 - 2010 2010 - 2011
Net Profit Ratio
Higher the ratios, Hire the efficiency of firm face adverse
condition and vice-versa. In year 2008-2009 company’s net profit was
6.31%, the next year 2009-2010 company’s profit was 4.26% and 2010-
2011 company’s profit was 3.14%. We show that the company’s net profit
was decrease by year to year.

43
(3)Expenses Ratio:
Meaning-
This ratio measures the relationship between different types of ratios related
with expenses and net sales.
Objective-
The main objective of computing different types of expenses ratio is the
efficiency or otherwise the incurrence of different types of expenses.
Components-
1- Expense
2-Net sales
Calculation-
This ratio is calculated by dividing different types of expenses by the net
sales. This ratio is expressed in terms of percentage. In the form of a
formula this may be expressed as under-
Expenses ratio= Expense * 100
Net sales

Calculation of 3 years:
2008-09 =
1665265
1529782
× 100 = 108.86%
2009-10 =
1641289
1689216
× 100 = 97.16%
2010-11 =
1701229
1752629
× 100 = 97.06%
108.86
97.16 97.06
90
92
94
96
98
100
102
104
106
108
110
2008 - 2009 2009 - 2010 2010 - 2011
Exepenses Ratio
Interpretation:
In 2008-09 ratio is 108.86% it is very high. In the year 2009-10 ratio is
97.16% and in the year 2010-11 ratio is 97.06%. we shows that the
expenses of the company is very high. So the profit of the company is
decreased.

45
(4)Operating Ratio:
Meaning-
This ratio measures a relationship between operating cost ant net sales.
Objective-
The main objective of computing this ratio is to find out the operational
efficiency with which production or purchase and selling operations are
carried on.
Components-
1-operating cost, which comprises:
(a) Cost of goods sold
(b)Operating expenses (office & administrative expenses, selling &
distribution expenses, discount, bad debts, interest on short term
loans etc)
2-Net sale: This means gross sales-sales return.
Calculation-
This ratio is calculated by dividing the operating cost by net sales. This
ratio is expressed as percentage. In the form of a formula this ratio may by
expressed as under-
OPERATING RATIO = [(COGS + OPERATING EXPENSE)] *100
NET SALES

Year 2009 2010 2011
Cogs 1064550 1021975 1106643
Operating exp 368628 595270 590954
Net sales 1529782 1689219 1752629
Operating ratio 93.69% 95.74% 96.86%
2008-09 =
1064550+368628
1529782
× 100 = 93.89%
2009-10 =
1021975+595270
1689219
× 100 = 95.74%
2010-11 =
1106643+590954
1752629
× 100 = 96.86%

47
93.89
95.74
96.86
92
92.5
93
93.5
94
94.5
95
95.5
96
96.5
97
97.5
2008 - 2009 2009 - 2010 2010 - 2011
Operating Ratio
IInntteerrpprreettaattiioonn:
Operating ratio is a low that time good for company. In the year 2008-09
ratio is 93.89%.in 2009-10 ratio is increased to 95.74% and in 2010-11
ratio is 96.86%.last year ratio is very high .so it is says that the company’s
profit is going to decrease.

48
2. In relation to Investments :
(1)Return on capital employed:
MMeeaanniinngg--
This ratio measures a relationship between net profit before interest & tax
and capital employed.
OObbjjeeccttiivvee--
The objective of calculating this ratio is to find out how efficiently the long
term funds supplied by the creditors and shareholders have been used.
CCoommppoonneennttss--
There are two components of this ratio which are as under:
1-Net profit before interest and tax.
2-Capital employed which refers to long term funds supplied by the share
holders and bank.
This ratio is calculated by dividing the net profit before interest & tax by
capital employed. It is expressed as percentage. In the form of a formula
this ratio may be expressed as under-
Return on capital =Net profit before interest & tax (EBIT) * 100
Employed Capital employed

49
CCaallccuullaattiioonn ooff ccaappiittaall eemmppllooyyeedd= equity share capital + preference share
capital + reserves & surplus + p & l a/c credit balance + long term debt –
fictitious assets.
Year 2009 2010 2011
Net profit(BIT) 106537 62267 78075
Cap employed 717925 755101 794586
Returns 14.84% 8.25% 9.82%
14.84
8.25
9.82
0
2
4
6
8
10
12
14
16
2008 - 2009 2009 - 2010 2010 - 2011
Return On Capital Employed
The return on capital employed measures the profitability in relation to
funds supplied by both the owners & creditor. company has low return in
2010. High return in 2009. Low return on capital employed is not good for
the company .This ratio indicates the ability of the firm to generate profit
per rupee on capital employed. Higher the ratio the more efficient the
management & utilization of capital employed.

50
(2) Return On Shareholder’s Funds Ratio:
Meaning-
This ratio measures a relationship between net profit after tax, interest and
shareholder’s funds.
Objective-
The objective of computing this ratio is to fid out how efficiently the funds
invested by the equity shareholders have been used.
Components-
There are two components of this ratio which are:
1-Net profit after interest and tax.
2-Shareholder’s fund
This means equity share + preference share + reserves & surplus + P&L
(cr.) – preliminary expense.
Calculation-
This ratio is computed by dividing the net profit after interest & tax by
shareholder’s funds. It is expressed as a percentage. In the form of a
formula this ratio may be expressed as under-
Return on shareholder’s = Net profit after interest & tax * 100
Funds Shareholder’s fund

Year 2009 2010 2011
Net profit(PAT) 96604 71974 55032
Shareholder’s fund 678740 733223 770822
Returns 14.23% 9.12% 7.14%
14.23
9.12
7.14
0
2
4
6
8
10
12
14
16
2008 - 2009 2009 - 2010 2010 - 2011
Return On ShareHolder's Fund
Interpretation:
Return on shareholder’s fund is decreasing it means
owner are not able to get good return on their capital. By this owners are
not off course happy which Is not good for the company also.
This ratio indicates the firm’s analyzing of generating
profit per rupee of shareholder’s fund. Higher the ratio the more efficient
funds.

52
(4)Return on equity shareholder’s funds:
Meaning-
This ratio measures a relationship between net profit after interest & tax
and preference dividend & equity shareholder’s funds.
Objective-
The objective of computing this ratio is to find out how efficiently the
funds supplied by the equity shareholders have been used.
Components:
There are two components of this ratio they are as under:
1. Net Profit after Interest, Tax & Preference dividend
2. Equity Shareholder’s Fund which means Equity Share Capital +
Reserves & Surplus – Fictitious Assets
Calculation-
This ratio is computed by dividing the net profit after interest, tax and
preference dividend by equity shareholder’s funds. It is expressed in
percentage. In the form of a formula this ratio may be expressed as under-
Return = Net profit after interest, tax & pref. dividend * 100
On Equity shareholder’s funds.
Eq. shareholder’s funds

53
Year 2009 2010 2011
Net profit(PAT) 96604 71974 55032
Shareholder’s fund 678740 733223 770822
Returns 14.23% 9.12% 7.14%
14.23
9.12
7.14
0
2
4
6
8
10
12
14
16
2008 - 2009 2009 - 2010 2010 - 2011
Return on Equity Shareholder'sFund
Return on equity share holder fund was 14.23%in 2009 which decreased in
9.12% and again decreased to 7.14% it indicates that fund which is
provided by the owners have been not used properly by the firm which can
be unsatisfactory for the company in the future.
This ratio indicates the firm’s ability of generating profit per rupee of
equity shareholder’s fund. Higher the ratio the more efficient the
management & utilization of equity shareholder’s fund.

54
(5)Earning per ratio (EPS):
Meaning-
This ratio measures the earnings that are available to an equity shareholder
on a per share basis.
Objective-
The objective of calculating this ratio is to find out the profitability of the
firm on per equity share basis.
Components:
1. Net Profit after Interest, Tax & Preference dividend
2. No. of equity Shares
Calculation-
This ratio is calculated by dividing the net profit after interest, tax and
preference dividend by the number of equity shares. It is expressed as an
absolute figure. In the form of a formula this ratio may be expressed as
under-
Earning per share =Net profit after tax, interest and pref. div.
(EPS) Number of equity share
Year 2009 2010 2011
NP-pref share 96604 71974 55032
No. of eq share 7500 7500 7500
Earning per share (Rs.) 12.88 1.60 7.34

55
2008-09 =
96604
7500
= 12.88 Rs.
2009-10 =
71974
7500
= 1.60 Rs.
2010-11 =
55032
7500
= 7.34Rs.
12.88
1.6
7.34
0
2
4
6
8
10
12
14
2008 - 2009 2009 - 2010 2010 - 2011
Earning Per Share
In 2008-09 the ratio is 12.88Rs then ratio is decreased in year the 2009-10.
In 2009-10 ratio is 1.60Rs. and after this year the ratio is increased. In
2010-11 ratio is 7.34Rs. So, we shows that the ratio is decreased in the year
2009-10 compare to other two years.

56
(6)Dividend per share ratio:
MMeeaanniinngg::
This ratio measures relationship between dividend and no. of equity shares.
OObbjjeeccttiivvee::
The objective of computing this ratio is to find out net distributed profit
after interest, tax and preference dividend to equity shareholders.
1. Dividend paid to equity shareholders
2. No. of equity shares
CCaallccuullaattiioonn::
This ratio is calculated by dividing dividend paid to equity shareholders by
no. of equity shares. It is expressed as absolute figure. In the form of a
formula this ratio can be expressed as under:
FFoorrmmuullaa::
Dividend per share = Total dividend declared
No. of shares
Year 2009 2010 2011
Total dividend declared 7500 15000 15000
No. of share 7500 7500 7500
Dividend per share (Rs.) 1 2 2

57
2008-09 =
7500
7500
= 1 Rs.
2009-10 =
15000
7500
= 2 Rs
.
2010-11 =
15000
15000
= 2 Rs.
1
2 2
0
0.5
1
1.5
2
2.5
2008 - 2009 2009 - 2010 2010 - 2011
Dividend Per Share
In general higher the ratio better it is and vice-versa. In the year 2008-09
ratio is 1 Rs. In the year 2009-2010 and 2010-2011 ratio is 2 Rs.

58
(7)Price Earnings Ratio:
MMeeaanniinngg--
This ratio measures relationship between market value of equity share and
earnings per share.
OObbjjeeccttiivvee--
The objective of computing this ratio is to find out expected return on
investment in equity shares.
1. Market price per equity share
2. Earnings per share
This ratio is calculated by dividing the market price per equity share by
earning per share. It is expressed as an absolute figure. In the form of a
formula this ratio can be expressed as under-
Price Earnings ratio = Market price per equity share
Earnings per share
Year 2009 2010 2011
Market price 10 10 10
Earnings per share 12.88 9.60 7.34
Price earnings ratio (times) 0.78 1.04 1.36

59
2008-09 =
10
12.88
= 0.78 Rs.
2009-10 =
10
9.60
= 1.04 Rs.
2010-11 =
10
7.34
= 1.36 Rs.
0.78
1.04
1.36
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2008 - 2009 2009 - 2010 2010 - 2011
PriceEarning Ratio
In year 2008-09 ratio is 0.78 Rs. In the year 2009-10 ratio is increased
to 1.04 Rs. The next year ratio is 1.36 RS. We show that the ratio is
increased year to year. So, it is benefited for the company.

60
ACTIVITY / TURNOVER RATIOS:
Meaning:
This ratio measures the effectiveness with which a
Firm uses its available resources. These ratios are also called turnover ratios
since they indicate the speed with which the resources are converted into
sales.
1. Stock Turnover Ratio
2. Working Capital Turnover Ratio
3. Debtors Ratio
4. Creditors Ratio
5. Total Assets Turnover Ratio
6. Book Value per Share Ratio
ACTIVITY /
TURNOVER RATIO

61
(1)STOCK TURNOVER RATIO:
Meaning-
This ratio establishes a relationship between cost of goods sold and average
inventory.
Objective-
The objective of computing this ratio is to find out the efficiency with
which the inventory is utilized.
Components:
There are two components of this ratio they are as under:
1. Cost of Goods Sold which is calculated as under:
-Opening stock + net purchases + direct expenses –
Closing stock
OR
-COGS = Net Sales – Gross Profit
2. Average Inventory or Average Stock
Formula:
STOCK TURNOVER RATIO: COST OF SALES
AVERAGE STOCK
Year 2009 2010 2011
Cost of goods sold 1064550 1021975 1106643
Average inventories 224414.5 177421.5 173318.5
Stock turnover ratio (times) 4.74times 5.76 times 6.39 times

62
2008-09 =
1064550
224414.5
= 4.74 times
2009-10 =
1021975
177421.5
= 5.76 times
2010-11 =
1106643
173318.5
= 6.39 times
4.74
5.76
6.39
0
1
2
3
4
5
6
7
2008 - 2009 2009 - 2010 2010 - 2011
Stock Turnover Ratio
In the year 2008-09 stock turnover ratio is 4.74 times. In the year 2009-10
ratio is 5.76 times and in the year 2010-11 ratio is 6.39 times. We show that
the ratio is going to increased. So higher the ratio indicates efficient
performance.

63
(2) WORKING CAPITAL TURNOVER RATIO:
Meaning:
This ratio establishes a relationship between net sales & working
capital.
Objective:
The objective of computing this ratio is to find out the efficiency with
which the working capital is utilized.
Components:
1. Net Sales which means Gross Profit – Sales Return
2. Working Capital which means Current Assets – Current Liabilities
Calculation:
This ratio is calculated by dividing the net profit by the working capital.
This ratio is usually expressed as no. of times. In the form of a formula this
ratio may be expressed as under.
Formula:
WORKING CAPITAL TURNOVER RATIO: NET SALES
WORKING CAPITAL
WORKING CAPITAL= CURRENT ASSETS – CURRENT
LIABILITIES

2008-09 =
1529782
300925
= 5.08 times
2009-10 =
1689219
409013
= 4.13 times
2010-11 =
1752629
478879
= 3.66 times
Year 2009 2010 2011
Net sales 1529782 1689219 1752629
Working capital 300925 409013 478879
WCT 5.08 times 4.13 times 3.66 times

65
5.08
4.13
3.66
0
1
2
3
4
5
6
2008 - 2009 2009 - 2010 2010 - 2011
Working CapitalTurnover Ratio
Interpretation
In the year 2008-09 working capital ratio is 5.08 times. In the year2009-10
ratio is 4.13 times and year 2010-11 ratio is 3.66 times. We show that the
year 2008-09 ratio is very high. Ratio is decreased by year to year.

66
(3)DEBTORS RATIO:
Meaning:
This ratio shows the number of days taken to collect the dues of credit
sales. It shows the efficiency or otherwise of collection policy of an
enterprise. The higher this ratio, the more unsatisfactory position it shows.
It indicates that the credit and collection policy is weak. This would also
result into unsatisfactory state working capital and weak liquid position.
Objective:
The objectives of computing this ratio is to find out the efficiency with the
trade debtors are managed.
Components:
There are two components of this ratio
1. Debtors and Bills receivable
2. Net Credit Sales
Formula:
DEBTORS RATIO: [(DEBTORS + BILLS RECEIVABLE) * 365
CREDIT SALES
Year 2009 2010 2011
Debtors + b/r 160379 142349 188045
Credit sales 1529782 1689219 1752629
Debtors ratio 38 30 38

67
Above calculated data show that the average of the ratio of three year is
minimum day to collect the money from debtors. It suggests that the credit
& collection policy is strong.
This ratio shows average collection period for credit it can be said that
the time period given to debtors to pay their payments can be known from
this ratio. This ratio is also known as Debtor’s velocity.
38
30
38
0
5
10
15
20
25
30
35
40
2008 - 2009 2009 - 2010 2010 - 2011
Debtors Ratio

68
(4) CREDITOR’S RATIO:
MMeeaanniinngg::
This ratio shows the number of days within which we can make payment to
our creditors for credit purchases. If the period is long than it is good for the
company because it suggest that the company can pay the amount of credit
purchase over a period of time.
OObbjjeeccttiivvee::
The objective of computing this ratio is to determine the efficiency with
which creditors are managed.
1. Creditors and Bills Payable
2. Net Credit Purchases
FFoorrmmuullaa::
CREDITORS RATIO: [(CREDITORS + BILLS PAYABLE) * 365
CREDIT PURCHASE]

69
Year 2009 2010 2011
Creditors 204997 197115 197106
Average daily purchase 960024 969668 1084543
Creditors ratio (days) 77 73 65
This ratio shows an average time period for which the credit purchase
remain outstanding or the average credit period allowed by the creditors.
This ratio is also known as Debt Payment period or Creditors Velocity
77
73
65
58
60
62
64
66
68
70
72
74
76
78
2008 - 2009 2009 - 2010 2010 - 2011
Creditors Ratio

70
(5)TOTAL ASSETS TURNOVER RATIO:
Meaning:
The ratio is obtained by dividing net sales by capital employed. The main
objective of calculating this ratio is to find the efficiency with which the
capital employed is being utilized.
This ratio indicates the firms’ ability to generate sales per rupee of capital
employed. The higher the ratio more efficient is the management and
utilization of capital employed.
Objective:
The objective of calculating this ratio is to point out the efficiency or
inefficiency in the use of total assets.
Components:
There are two components of this ratio which
1. Net Sales
2. Total Assets
Formula:
OVERALL TURNOVER RATIO: NET SALES
TOTAL ASSETS
Year 2009 2010 2011
SALES 1529782 1689219 1752629
Total assets 901002 938920 971036
Total Assets Turnover Ratio 1.70times 1.80 times 1.80 times

71
2008-09 =
1529782
901002
= 1.70
2009-10 =
1689219
938920
= 1.80
2010-11 =
1752629
971036
= 1.80
1.7
1.8 1.8
1.64
1.66
1.68
1.7
1.72
1.74
1.76
1.78
1.8
1.82
2008 - 2009 2009 - 2010 2010 - 2011
Total Assets Turnover Ratio
In the year 2008-09 ratio is 1.70. In the year 2009-10 and 2010-11 ratio are
1.80. ratio is increased after the year 2008-09. In 2009-10 and 2010-11 ratio
are equal.

72
(6)Book value per share ratio:
Meaning:
This ratio establishes relationship between equity share capital & reserves
and surplus with no. of shares.
Objective:
The objective of computing this ratio is to find out the proportion of share
capital & reserves & surplus with no. of equity shares.
Components:
1. Equity share capital & reserves and surplus
2. No. of equity shares
Calculation:
This ratio is computed by dividing equity share capital & reserves &
surplus by no. of equity shares. It is expressed as an absolute figure.
Year 2009 2010 2011
Eq. shares 75000 75000 75000
Reserves & surplus 510928 565411 603010
No. of eq shares 7500 7500 7500
Book value per share 78.12 85.39 90.40

2008-09 =
75000+510928
75000
= 78.12
2009-10 =
75000+565411
7500
= 85.39
2010-11 =
75000+603010
7500
= 90.40
78.12
85.39
90.4
70
72
74
76
78
80
82
84
86
88
90
92
2008 - 2009 2009 - 2010 2010 - 2011
Book Value Per ShareRatio
In the year 2008-09 ratio is 78.12. In year 2009-10 ratio is 85.39 and
in the year 2010-11 ratio is 90.40. We show that the ratio is going to be
increased year by year. So it is profitable for the company.

74
LIQUIDITY RATIO:
Meaning-
This ratio measures the effectiveness with which a firm uses its
available resources. These ratios are also called as turnover ratios since they
indicate the speed with which the resources are converted into sales.
(1) Current ratio
(2) Liquid / Acid test / Quick ratio
LIQUIDITY RATIO

75
(1)Current Ratio:
Meaning-
This ratio establishes a relationship between current assets and current
liabilities.
Objective-
The objective of computing this ratio is to find out the ability of the firm to
meet its short term obligations.
Components:
1. Current Assets
2. Current liabilities
FFoorrmmuullaa::
CURRENT RATIO: CURRENT ASSETS
CURRENT LIABILITIES

Year 2009 2010 2011
Current assets 575213 685644 798141
Current liabilities 279288 276631 2629262
Current Ratio 2.09:1 2.48:1 2.78:1
This ratio indicates as of current assets available for each rupee of current
liability. Higher the ratio, greater the margin of safety for short term
creditors & vise-versa. However too high too or low ratio requires
investigation because it shows extra funds in the firm or the absence of
investment opportunity with the firm & too low ratio may indicate over
trading or under capitalization. Traditionally a current ratio of 2:1 is
considered to be a satisfactory ratio.
2.09
2.48
2.78
0
0.5
1
1.5
2
2.5
3
2008 - 2009 2009 - 2010 2010 - 2011
Current Ratio

77
(2)LIQUID / ACID TEST / QUICK RATIO:
Meaning:
To remove the defect of current ratio, liquid ratio is used. It is a variant of
current ratio which is designed to show the amount of funds available to
meet immediate payments. Expense paid in advance is also excluded from
liquid assets and then liquid asset is obtained after deducting stock from
current assets. Liquid liabilities are taken after excluding bank over draft
from current liabilities, even incomes received in advance is also deducted
from current liabilities. 1:1 is considered to be the standard ratio.
Objective:
The objective of calculating this ratio is to find out the ability of the firm to
meet its short term obligations as and when due without relying upon the
realization of stock.
Components:
1. Quick assets/Liquid assets: Which means those assets which can be
converted short noticed without a loss of value. They are: Cash balance,
Marketable securities, Bills receivable, Bank balance & debtors.
2. Liquid Liabilities: Liquid Liabilities = Current liabilities –Bank over
Draft
Formula:
LIQUID RATIO = LIQUID ASSETS
LIQUID LIABILITIES

Year 2009 2010 2011
Liquid assets 387580 518434 568714
Liquid liabilities 274288 276631 269262
Liquid Ratio 1.41:1 1.87:1 2.11:1
Liquidity ratio of the firm has increased from in 2009-2011 . It shows
inefficient management and inefficient use of liquid assets. Ideal ratio is 1:1
so company has satisfactory ratio.
1.41
1.87
2.11
0
0.5
1
1.5
2
2.5
2008 - 2009 2009 - 2010 2010 - 2011
Liquid Ratio

79
LEVERAGE RATIOS:
Meaning:
Capital structure of a company consists of a verity of securities.
For e.g. Equity share & preference share which satisfy its share capital
requirements while by other securities such as debentures, warrant etc. the
company satisfies its access requirement of long term capital & borrowed
capital, leverage ratios are calculated. Sum of the leverage ratios are as
under.
(1)Proprietary ratio
(2)Debt-equity ratio
(3)Long-term funds to fixed assets ratio
(4)Capital gearing ratio

80
(1)Proprietary Ratio:
Meaning-
This ratio measures the relationship between shareholder’s funds and total
assets of the company.
Objective-
The objective of calculating this ratio is to find out how efficiently the
proprietors have utilized the funds for purchasing the assets.
Components:
1. Shareholder’s funds or proprietor’s fund
2. Total assets or total liabilities
Calculation-
This ratio is computed by dividing shareholder’s fund by total assets. It is
expressed as percentage. In the form of a formula this may be expressed as
under-
Formula:
Proprietary Ratio= Shareholder’s funds * 100
Total assets/ liabilities

Year 2009 2010 2011
Proprietary fund 770822 733223 770822
Net assets 971036 938920 971036
Proprietary ratio 79.38% 79.08% 79.38%
Proprietary ratio shows 2009 & 2010 an upward move and after 2009 &
before 2011 in year 2010 downward trend. However, it has showed such
satisfactory position that is ideal for the firm.
79.38
79.08
79.38
78.9
78.95
79
79.05
79.1
79.15
79.2
79.25
79.3
79.35
79.4
79.45
2008 - 2009 2009 - 2010 2010 - 2011
Proprietary Ratio

82
(2)Debt Equity Ratio:
Meaning:
This ratio is only another form of proprietary ratio and establishes
relationship between the outside long-term liabilities and owners’ funds. It
shows the proportion of long-term external equities and internal equities i.e.
is proportion of funds provided by long-term creditors and that provided by
shareholders or proprietors.
A higher ratio means that outside creditors have a larger claim than the
owners of the business. The company with high-debt position will have to
accept striker conditions from the lenders, while borrowing money
Objective:
The objective of computing this ratio is to find out the relative proportion
of debt & equity in financing the assets of a firm.
Components:
1. Long term debt which means all types of secured and unsecured
loans.
Ex. Debtors, Loans from financial institution
2. Shareholder’s funds which means equity share capital +
Preference share capital + Reserves & surplus – Fictitious
Assets
Formula:
Debt Equity Ratio: long-term liability
Shareholder’s fund

2008-09 =
39185
678740
× 100 = 5.77%
2009-10 =
21876
733223
× 100 = 2.98%
2010-11 =
27764
77082
× 100 = 3.08%
In the year 2008-09 ratio is 5.77%. In year 2009-10 ratio is 2.98% and the
year 2010-11 ratio is 3.08%. We show that the in the year 2008-09 ratio is
high compare to other two years. Ratio is decrease in the year 2009-10 after
this year ratio is increased.
Year 2009 2010 2011
Long term debt 39185 21878 23764
Share holders fund 678740 733233 770822
Debt eq ratio 5.77% 2.98% 3.08%
5.77
2.98 3.08
0
1
2
3
4
5
6
7
2008 - 2009 2009 - 2010 2010 - 2011
Debt Equity Ratio

84
(3)Long term funds to fixed assets ratio:
Meaning:
The ratio shows the relationship between fixed capital and fixed asset. The
ratio must be 1:1 or more i.e. the fixed capital must be more than fixed
assets or must at least be equal to fixed assets. If fixed capital is less than
fixed assets, it would mean that short term funds have been used in
purchasing fixed assets. When this short-term obligations mature, the
business would be put to trouble and may be compelled to dispose of fixed
assets at a considerable loss to the business.
Objective:
With the help of this ratio one can move how efficiently the long term
funds have been invested in fixed assets.
Component:
1. Shareholder’s funds + Long term debts
2. Fixed assets
Formula:
Long term funds to: pref.shares + eq. share capital, debentures+loans
Fixed assets ratio Fixed assets
Year 2009 2010 2011
Long term funds 39185 21878 23764
Fixed assets 272599 242563 220865
Long term funds to fixed Ratio 0.14:1 0.09:1 0.11:1

85
2008-09 =
39185
272599
= 0.14:1
2009-10 =
21878
242563
= 0.09:1
2010-11 =
23764
220865
= 0.11:1
Long-term ratio decreased from 2010 to 2011. It has shown fall in
the ratio. The fixed assets should always be acquired out of long-term
funds, meaning thereby that this ratio should not be less than 100. The
company has not achieved a good ratio as it shows a downward trend.
0.14
0.09
0.11
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2008 - 2009 2009 - 2010 2010 - 2011
Long Term Fund To Fixed AssetsRatio

86
(4)Capital gearing ratio:
Meaning:
This ratio measures a relationship between equity shares capital and fixed
interest bearing capital.
Objectives:
The objective of computing this ratio is to find out the proportion between
fixed interest bearing capital & equity share capital.
Components:
1. Fixed interest bearing capital (preference share capital,
debenture, long term loan)
2. Equity share capital
Calculation:
This ratio is calculated by dividing fixed increased bearing capital by equity
share capital. This ratio is expressed as a pure ratio. In the form of a
formula this ratio may be expressed as under:
Formula:
Capital gearing ratio= Fixed interest bearing capital
Equity share capital

87
COMMON SIZED STATEMENT
MEANING :
They are those statements in which items reported in the financial
statements are converted into percentage by taking some common base. In
common size income statement, the net sales are assumed to be 100% and
other items are expressed as a percentage of sales. Similarly in common
size balance sheet the total assets or total liabilities are assumed to be 100%
and other items of assets and liabilities are expressed as a percentage of this
total .i.e., 100% common size statements because each statement is reduced
to the total of 100 and each individual item is expressed as a percentage.
Importance of common size statement
The use of common size statement can make comparisons of business firms
of different sizes much more meaningful since the numbers are brought to
the common base. i.e., percentage. Such statement allows an analyst to
compare the operating and financing features of two companies in the same
industry

88
COMMON SIZE STATEMENT FROM P&L A/C
(Rupees’000s)
PARTICULAR 2008-09 % 2009-10 % 2010-11 %
Income
Sales 177040
4
100 1864514 100 198275
9
100
Less: Excise duty 240622 13.59 175295 9.40 230130 11.61
Net sales 152978
2
86.41 1689219 90.60 175262
9
88.39
Other income 36998 2.08 14512 0.78 26806 1.35
Increase/decrease in stock (7464) 0.42 (145) 0.01 (711) 0.04
Expenditure
Raw material & stores
consumed
102612
3
57.94 989946 53.09 107161
5
54.07
Cost of finish goods
purchased
34600 1.95 37059 1.99 38502 1.94
Manufacturing & other
expenses
365080 20.62 366879 19.68 372539 18.79
Employee costs 201011 11.35 212300 11.39 185850 9.37
Interest 1881 0.11 648 0.03 780 0.04
Depreciation 36570 2.07 34457 1.85 31943 1.61
P&l Before tax & p. p. a
Prior period adjustment 585 0.03 30 0 (580) 0.03
P&L before tax
Less: provision for
a) Current tax - 4463 0.24 16173 0.82
b) Deffered tax (11530) 0.65 (9707) 0.52 6078 0.31
c) Fringe benefit tax 1600 0.09 - - -
d) Mat credit
receivable
- (4367) 0.23 - -
P&L after tax
Less: tax adjustment of
earlier years
- (96) 0.01 792 0.04

89
P&L after tax
Add: amount withdraw
from general reserve
104300 5.89 - - - -
Add: profit brought
forward from last year
1203 0.07 124 0.01 10000 0.50
Total 8899 0.50 72098 3.87 65302 3.28
P & L available for
appropriation
Appropriation
Proposed dividend 7500 0.42 15000 0.80 15000 0.76
Corporate tax on proposed
dividend
1275 0.07 2491 0.13 2433 0.12
General reserve 1 - 5400 0.29 4200 0.21
General reserve 2 - 39207 2.10 28399 1.43
Balance carried to balance
sheet
124 0.01 10000 0.54 15000 0.77
Total 8899 0.50 72098 3.87 65032 3.28
IInntteerrpprreettaattiioonn ::
As we know that profit is the main objective for any company of
business. Every company wants to increase its profit. The total income of
the year 2008-09 is 88.91% and 2009-10 increase income at 91.38% and
2010-11 is decrease at 89.78%. It shows that the company profit increase or
decrease both. The expenditure of the company is decreased in every year.
So it is profitable for the company.

90
COMMON SIZE STATEMENT FROM BALANCE
SHEET :
PARTICULAR 2008-
09
% 2009-
10
% 2010-
11
%
SOURCES OF FUNDS:
shareholders' funds
share capital 75000 12 75000 11.32 75000 10.68
reserves and surplus 510928 81.73 565411 85.37 603010 85.93
loan funds:
Secured 11791 1.89 4192 0.63
deferred tax liability (net) 27394 4.38 17686 2.68 23764 3.39
TOTAL 625113 100 662289 100 701774 100
APPLICATION OF FUNDS
fixed assets:
gross block 1081325 173.98 1080215 163.10 1083134 154.34
less:deprecition 808726 125.37 837652 126.68 862269 122.87
capital work in progress 3218 0.52 5709 0.86 330 0.04
Investments
current assets, loans and
advance:
Int on investment 407 0.07 211 0.03 68 0.01
Inventories 187633 31.02 167210 25.50 179427 25.57
sundry debtors 146938 23.22 140767 21.57 179855 25.66
cash and bank balance 102703 16.43 224774 33.94 234517 33.62
Loan & advances 137532 22 152682 23.05 154274 21.98
less:current liabilities
and provisions
current liabilities 204997 30.79 197115 29.76 197106 28.09
Provisions 69291 11.08 79516 12.01 72156 10.28
Net current assets 625113 100 662289 100 701774 100

IInntteerrpprreettaattiioonn ::
1) From the common sized balance sheet we can conclude that it is an
increasing trend in almost every except few.
2) Share capital is decreasing from 2009 but against that company is
providing more amount to reserves & surplus
3) Fixed liability have decreased in 2010 but in 2011 is also increased
comparer to 2009. Investment is decreased.
4) Thus overall from the common sized statement of balance sheet we
can conclude that the company is facing average financial position.

92
CASH FLOW STATEMENT:
Particulars 2008-09 2009-
10
2010-11
A. CASH FLOW FROM
OPERATING ACTIVITY
Net profit before tax (106534) 62267 78075
Adjustment for:
Prior period adjustment 36570 (7) (580)
Depreciation 35229 34457 31943
Increase in VRS expenditure (227) 38367
Interest receive (6225) (80933) (12865)
Interest paid 845 33 23
Provision for debt & guarantee 1229
Profit on sale of fixed assets (1295) (504) (5565)
Loss on sale of fixed assets 98 150 153
Profit on sale of investment (23119)
Operating profit before working
capital changes
64688 126670 92413
Adjustment for:
Trade & other receivable (100569) 6171 (39713)
Inventories 73563 20422 (12217)
Loans, advances & others 15035 (2913) 2184
Interest accrued (154) 197 143
Trade payable & others 42162 (7881) (10)
Provisions 6218 1507 (7301)
Cash generated from operations (28433) 144173 35499
Direct/taxes paid/tax deducted at
sources
(18120) (12237) (19208)
Wealth tax paid returning to previous
year
(64)
Net cash from operating
activities
46617 131936 16291

B.CASH FLOW FROM
INVESTING ACTIVITY
PURCHASES OF Fixed assets and
investment in CWIP
(2620) (7885) (6149)
Sales of fixed assets 2793 1334 6695
Increase in investment 8093 11308
Interest received 6225
Dividend received 227
Net proceeds from sale of share 26294
Interest accrued on investment
Proceeds from maturity of bonds 5000 3304
Net Cash flow from investing
activity
32919 6542 15158
C.CASH FLOW FROM
FINANCING ACTIVITY
Repayment of sales tax deferred loan (9755) (7599) (4192)
Dividend paid (26324) (8775) (17491)
Interest paid (815) (33) (23)
Net cash flow from financing
activity
36894 16407 21706
Net increased/decreased in cash (50592) 122071 9743
Opening cash balance 153295 102703 224774
Closing cash balance 102703 224774 234517

94
Profit & loss account
PARTICULAR 2008-2009 2009-2010 2010-2011
Income
Sales 1770404 1864514 1982759
Less: Excise duty 240622 175295 230130
Net sales 1529782 1689219 1752629
Other income 36998 1566780 14512 1703731 26806 1779435
Inc or dec in stock (7464) (145) (711)
1559316 1703586
Expenditure
Raw material &
stores consumed
1026123 989946 1071615
Cost of finish goods
purchased
34600 37059 38502
Manufacturing &
other expenses
365080 366879 372539
Employee costs 201011 212300 185850
Interest 1881 648 780
Depreciation 36570 1665265 34457 1641289 31943 1701229
P&l Before tax & p.
p. a
(105949) 62297 77495
Prior period
adjustment
585 30 (580)
(106534) 62267 78075
P&L before tax
Less: provision for
a) Current tax - 4463 16173
b) Deferred tax (11530) (9707) 6078
c) Fringe benefit
tax
1600 -
d) Mat credit
receivable
- (4367) -
(96604) 71878 55824
P&L after tax
Less: tax adjustment
of earlier years
- - (96) 792

95
(96604) 71974 55032
P&L after tax
Add: amount
withdraw from
general reserve
104300 - - -
Add: profit brought
forward from last
year
1203 124 10000
Total 8899 72098 65302
P & L available for
appropriation
Appropriation
Proposed dividend 7500 15000 15000
Corporate tax on
proposed dividend
1275 2491 2433
General reserve 1 - 5400 4200
General reserve 2 - 8775 39207 62098 28399 50032
Balance carried to
balance sheet
124 10000 15000
Total 8899 72098 65032

96
Balance Sheet
PARTICULAR 2008-2009 2009-2010 2010-2011
SOURCES OF FUNDS:
shareholders' funds
share capital 75000 75000 75000
reserves and surplus 510928 585928 565411 640411 603010 678101
loan funds:
secured 11791 4192
deferred tax liability
(net)
27394 17686 23764
TOTAL 625113 662289 701774
APPLICATION OF
FUNDS
fixed assets:
gross block 1081325 1080215 1083134
less:deprecition 808726 837652 862269
capital work in
progress
3218 275817 5709 248272 330 221195
Investments 10004 1700
current assets, loans
and advance:
Int on investment 407 211 68
Inventories 187633 167210 179427
sundry debtors 146938 140767 179855
cash and bank balance 102703 224774 234517
Loan & advances 137532 575213 152682 685644 154274 748141
less: current liabilities
and provisions
current liabilities 204997 197115 197106
provisions 69291 274288 79516 276631 72156 269262
Net current assets 300925 409013 478879
Miscellaneous

97
expenditure
Voluntary retirement
benefits
38367 - -
625113 662289 701774

98
ANALYSIS OF SIGNIFICANT
ACCOUNTING POLICY
1. BASIS OF PREPARATION OF FINANCIAL
STATEMENTS :
The financial statements are prepared as per historical cost
convention and in accordance with the generally accepted accounting
principles in India, the provisions of the Companies Act, 1956 and the
applicable accounting standards.
2. USE OF ESTIMATES :
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported amount of
revenues and expenses during the reporting period.
Differences between the actual results and the estimates are recognized in
the period in which the same are known/materialized.
3. REVENUE RECOGNITION :
Sales are recognized on invoicing of goods.
Other income is recognized only when it is reasonably certain that the
ultimate collection will be made.
Insurance claims lodged with the insurance company in respect
of risks covered are accounted for as and when admitted by the insurance
company.

99
Interest income is booked on a time proportion basis taking into
account the amounts invested and the rate of interest.
4. FIXED ASSETS:
Fixed Assets are stated at cost, net of CENVAT/VAT credit, if
any, after reducing accumulated depreciation until the date of balance
sheet. Direct costs are capitalized until the assets are ready for use and
include financing costs relating to any borrowing attributable to acquisition.
Capital work-in-progress includes the cost of fixed assets that are not yet
ready for the intended use, advances paid to acquire
fixed assets and the cost of assets not put to use before the balance sheet
date.
5. INTANGIBLE ASSETS:
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
6. DEPRECIATION:
Depreciation on tangible assets has been provided as under:
Vadodara unit :
Cost of leasehold land is amortized over the period of lease.
On assets purchased prior to January 1st, 1987 on written down value
method at the rates specified under the Income tax rules and on assets
purchased subsequent to January 1st, 1987 on written down value method
at the rates specified in Schedule XIV of the Companies Act, 1956, on pro-
rata basis.

Pithampur unit
Cost of leasehold land is amortised over the period of lease.
Depreciation is provided on straight-line method at the rates specified
in schedule XIV of the Companies Act, 1956, on pro-rata basis, and in case
of capitalization of exchange fluctuations, over the remaining life of such
assets.
7. INVESTMENTS:
Investments meant for long term are carried at cost together with all
incidental cost of acquisition.However, when there is decline, other than
temporary in the value of a long term investments, the carrying
Amount is reduced to recognize the decline.
8. VALUATION OF INVENTORIES:
Inventories are valued at cost or net realizable value, whichever is
lower. The basis of determining cost for various categories of
Inventories is as follows -
Raw materials First-In-First-Out basis.
Material & Consumables
in transit At invoice price.
Work-in-process At raw material cost plus conversion cost,
wherever applicable.
Consumable stores,
Spares and Tools First-In-First-Out basis.

102
9. FOREIGN CURRENCY TRANSACTIONS:
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the transactions. At the year end, all the monetary
assets and liabilities denominated in foreign currency are
restated at the closing exchange rates. Exchange differences resulting from
the translation of such monetary assets and liabilities and also the exchange
differences on settlement of foreign currency transactions are recognized in
the profit and loss account.
10. RESEARCH AND DEVELOPMENT:
Expenditure on the design and production of prototypes relating to
research & development has been charged to profit & loss account.
Capital expenditure relating to research & development is treated as
fixed assets.
11. EMPLOYEE BENEFITS:
a) Post-employment benefits
i) Defined Contribution plan Company''s contribution paid/payable for the
year to defined contribution retirement benefit schemes are charged to
profit & loss account.
ii) Defined Benefit plan Company''s liabilities towards defined benefit
schemes are determined using the projected unit credit method.
Actuarial valuations under the projected unit credit method are carried out
at the balance sheet date. Actuarial gains and losses are recognized in the
profit & loss account in the period of occurrence of

103
such gains and losses. Past service cost is recognized immediately to the
extent that the benefits are already vested and otherwise it is amortized on
straight-line basis over the remaining average period
until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligation as reduced by
the fair value of plan assets.
b) Short-term employee benefits.
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognized undiscounted during the
period employee renders services. These benefits include special
allowance.
c) Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the balance sheet date.
12. TAXATION:
Provision for income tax is ascertained on the basis of assessable profit
computed in accordance with the provisions of Income Tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence, on
timing differences being differences between taxable incomes and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.

104
Deferred tax assets are recognized only if there is a reasonable
certainty that they will be realized and are reviewed for the appropriateness
of their respective carrying values at each balance sheet date.
13. PROVISIONS & CONTINGENT LIABILITIES:
The Company recognizes a provision when there is a present
obligation as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will not,
require an outflow of resources. Where there is a possible obligation or a
present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
14. GOVERNMENT GRANT:
State subsidy received from Madhya Pradesh State Industrial
Development Corporation for setting up unit in the specified backward area
has been credited to Capital state subsidy reserves account.

105
CONCLUSION
I ,(Hardik J. Shah) here by conclude that I have analyzed the
annual reports of Panasonic energy ltd of The year 2010-11. It was a
wonderful experience by knowing the details of company I make an honest
endeavor to put my efforts towards the completion of this financial project
report. Analysis of this financial report has helped me to get many ideas
regarding the financial condition of the company.
Comment on the basis of Net Profit :
Net profit ratio measures the percentage of each sales rupee
remaining after all costs & expense including interest & taxes.
Net profit ratios of the last 3 years are as follows :
2009 –6.31%
2010 –4.26%
2011 –3.14%
It means the profitability of the continuously increased Return on
capital employed
Return on capital employed is lower during all the 3 years. So it is not
good indication of financial position.
Total assets turnover ratio
Total assets turnover ratio for the year

106
2009 –1.70 Times
2010 –1.80 Times
2011 –1.80 Times
Which is sufficient & high so we can conclude that the assets of the
company not utilized efficiency.
Operating Ratio :
The operating ratio is continuously increasing.
We can conclude that it is not good for the company to have
high operating ratio.
From above comparison of ratios we can conclude that in
initially In 2009 company is not in a good position from the view point of
finance & liquidation. In 2010 company comes in a good position from all
the view point. Company’s profit, earning, turnover, return, all in a good
position. In the year 2011 the company’s overall condition again increased.
This indicates continuously progressive & profitable company because year
after year we can see there are increased the ratio.

107
Bibliography & References
Website :
www.panasonicenergy.In
References :
B.s.shah publication of accountancy
(company account)
M.Y.Khan & P.K.Jain
T.J.Rana

108
Annexures
[1] A copy of Panasonic energy India co.ltd. annual report of the year
2008-2009
--Balance sheet
--Profit & loss account
--All schedules
2009-2010
--Balance sheet
--All schedule
2010-2011
--Balance sheet
--All schedules

A FINANCIAL REPORT ON Panasonic Energy India co. Ltd.

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (7)

Similar to A FINANCIAL REPORT ON Panasonic Energy India co. Ltd.

Similar to A FINANCIAL REPORT ON Panasonic Energy India co. Ltd. (20)

More from Hardik Shah

More from Hardik Shah (9)

Recently uploaded

Recently uploaded (18)

A FINANCIAL REPORT ON Panasonic Energy India co. Ltd.