The auto components industry faced a slowdown in the first half of 2014 due to slipping growth in commercial vehicles and passenger cars, though two-wheeler and three-wheeler segments witnessed strong growth. While the short-term challenge was a sales slowdown in several markets, a longer-term challenge was losing domestic market share to increasing competition. Operational excellence, scenario planning, and risk management will be important for auto component companies to succeed in an uncertain future environment.

1. 1
FINANCIAL ANALYSIS OF
FEDERAL MOGUL
A training report submitted in partial fulfillment of the requirement for the degree of
MASTERS OF BUSINESS ADMINISTRATION
(2015-2017)
SUBMITTED BY :
HARSHARAN SINGH
MBA 1 – D
ROLL NO. – 15421153
SCHOOL OF MANAGEMENT STUDIES
PUNJABI UNIVERSITY PATIALA

2. 2
CONTENT
S.No. Topic Page No.
1. Executive summery 2
2. Chapter-1 Introduction
- Profile
- History
- Milestone
- Board of Directors
- Financial profile of company
- Objective of Study
- Management discussion and analysis
- SWOT analysis
- Organization Structure
4
6
10
11
11
13
15
19
20
3. Chapter-2 Financial Statements
- Definition
- Characteristics and Nature
- Objectives
- Types
22
23
24
25
3. Chaper-3 Financial Analysis
- Research Methodology
- Meaning
- Objectives
- Tools
- Balance Sheet
- Profit and Loss Account
28
28
29
29
31
32
4. Chapter-4 Analysis of financial statements using
tools of financials analysis
- Comparative Analysis
- Common Size Analysis
- Ratio Analysis
- Cash flow Statement
- Limitations of study
- conclusion
- Source
34
37
40
43
45
46
47

3. 3
EXECUTIVE SUMMARY
The project assigned to me was to study the financial health of Federal Mogul Goetze India. I
decided to choose one of India’s largest companies in a sector that has rapidly grown over the
last few years and a company where leaders like Mr. K.N. Subramaniam. Through this report, I
have analyzed the financial environment in which Federal mogul is operating.
Through a thorough financial analysis, my aim to understand the financial factors influences the
company and its decision making and also knows the financial position of the company. Along
with my assignment work I was made aware about other financial operations of the company
like how they maintain their employees record their salary and other incentives. How the
evaluation of salary is done by them. They use to record all the data of employees in excel and
raw material in access. The company is into cost accounting and general accounting.
They carry general accounting for salary purpose, bills payment, raw material, etc. they make
all the payments through drafts and cheques no cash transactions are carried in this company
and cost accounting to find the cost of the products like rings, piston, etc.
I started my analysis from the annual report and then I started from comparative and common
size statements for analysis.
Later, I try and evaluate the various ratios to appreciate their impact on company’s performance
over the last few years. The financial statements of last few years are identified, studied and
interpreted in light of company’s performance. Along with this I prepared cash flow statement.
Critical decisions of distributing dividends, Issue of bonus Debentures and other current news
are analyzed and their impact on the bottom line of the company is assessed. Finally, I study
ratio analysis, comparative and common size statements and cash flow analysis of the company
to analyzing the financial position of the company.

4. 4
CHAPTER-1
INTRODUCTION

5. 5
PROFILE
Federal-Mogul Goetze (India) Limited was established in 1954 as a joint venture with Goetze-
Werke of Germany.
Goetze-Werke of Germany is now owned by Federal-Mogul Corporation, a $6.3 billion global
company and one of the leading manufacturers of automotive components in the world.
Federal-Mogul Goetze (India) Limited is the largest manufacturer of pistons and piston rings in
India.
Federal-Mogul Goetze (India) Limited
 Manufacturer of world-class pistons, piston rings, sintered parts and cylinder liners
covering a wide range of applications including two/three-wheelers, cars, SUVs,
tractors, light commercial vehicles, heavy commercial vehicles, stationary engines and
high output locomotive diesel engines.
 Widest range of piston rings and pistons varying from 30mm to 300mm diameter.
 The most modern production facilities at Bengaluru, Patiala and Bhiwadi are certified
TS 16949, ISO14001 and OHSAS 18001.
 Market leaders both in OEM and aftermarket. Exports to many countries.
 Goetze and Goetze Brico provide leading-edge technologies and competitive solutions
for original equipment manufacturers and the automotive aftermarket.

6. 6
1.Production Capacity:  Piston rings
 Pistons
 54.96 Million
 13.57 Million
2. Turnover: Apr 06 - Dec 06 INR 4500 Million
3. Net Profit (after tax): Apr 06 - Dec 06 INR (63.14) Million
4. Product range:
Pistons, Piston Rings,
Cylinder Liners, Light Alloy
Castings

7. 7
History
The company was founded in Detroit in 1899 by J. Howard
Muzzy and Edward F. Lyon as the Muzzy Lyon Company. Muzzy and Lyon went into business
together producing mill supplies and rubber goods.] In addition, the partners formed a
subsidiary called Mogul Metal Company where they launched various bearing innovations. To
fit consumer needs, the pair began producing bearings made from their own Babbitt
metal called "Mogul", an alloy of tin, antimony and copper. The product was trademarked under
“Mogul” and “Duro”.In addition to Babbitt metal, Muzzy and Lyon were also known for
inventing the process of custom die-casting bearings to suit proper size and shape.
The Muzzy Lyon Company bearings business proved
successful in the early 1900s and became the pair's main concern, with Buick as one of their
earliest customers. The Muzzy Lyon Company later merged with an engine bearings and
bushings manufacturing company, Federal Bearings and Bushings Corporation. Federal
Bearings & Bushings Co. was founded in 1915 by a group of Detroit businessmen. The
company initially consisted of Mogul Metal, and Federal and Bower Roller Bearing Co. but
later merged in 1924 to form Federal-Mogul-Bower Bearings, Inc. The combined company
manufactured bronze bearings, a product the Muzzy Lyon Company did not supply. To solidify
their success, the entire Muzzy Lyon Company merged with Federal Bearings and Bushing in
1924 to become Federal-Mogul Corporation.
The group established a research division with the help of Battelle
Memorial Institute in 1929. During the depression, Federal-Mogul Corp. invested in the Equi-
Poise propeller division. The companies continued advancements in the propeller industry were
recognized in 1941, when Federal-Mogul was named the world’s largest manufacturer of
motorboat propellers.

8. 8
In 1932, the company developed a new alloy called C-100, the first new bearing material since
the discovery of Babbitt metal. The Federal-Mogul Corp. research team revamped the C-100 in
1934 to create a C-50 alloy.
In 1955, the company acquired National Motor Bearing Company, resulting in a
company name change to Federal-Mogul Bower. In addition to acquiring another company,
Federal-Mogul Bower was listed as #350 on the Fortune 500, with total sales of $100 million
the following year. To further Federal-Mogul Bower expansion, the company opened business
operations in Switzerland. Shortly after, the company opened established their first overseas
service center in Antwerp, Belgium in 1962. Continuing the expansion of products, Federal-
Mogul Bower’s Arrowhead division began to manufacture components for NASA’s Saturn
launch vehicle in 1963. In April 1965, the company was renamed Federal-Mogul Corporation
following a merger with Sterling Aluminum Products.
In 1966, Federal-Mogul Corporation relocated from downtown Detroit, establishing its
corporate headquarters in Southfield, Michigan.
In 1981, Federal-Mogul Arrowhead parts were implemented in the NASA space shuttle
launch. That same year, the company won a claim in the Supreme Court to patent a process
for curing rubber based on the mathematical equation written by Swedish chemist Svante
Arrhenius in 1889. The US Patent Office had initially rejected Federal-Mogul's claim on the
basis that neither a formula, as a law of nature, nor a computer program based on such a
formula, could be patented.
In 1998, the company acquired Cooper Industries and brands including Anco wiper
blades, Champion ignition, MOOG chassis, Wagner and Abex friction, and Wagner and Blazer
lighting. That same year, Federal-Mogul also acquired Turner & Newall, a building materials
company based in Manchester, UK. Turner & Newall was one of the world's largest
manufacturers of asbestos-related products, including those made with blue crocidolite asbestos
mined in South Africa. Turner & Newall was responsible for the Armley asbestos

9. 9
disaster in Leeds, UK. After the acquisition, Federal-Mogul set aside approximately $2.1 billion
to cover asbestos-related claims but that amount provide insufficient. The large number of
products liability claims that came with this acquisition were largely responsible for Federal-
Mogul's federal Chapter 11 bankruptcy filing in 2002.
During the company’s restructuring, Federal-Mogul Corporation acquired multiple
companies including Robert G. Evans Co., Hanauer Machine Works, Inc., Metaltec, Inc.,
Mather Co. and Fel-Pro, Inc. The company emerged from Chapter 11 reorganization in January
2008 and in April 2008; the company listed Class A common stock on NASDAQ under the
trading symbol FDML.
In June 2010, Federal-Mogul expanded further into Asia by opening a headquarters and
technical center in Shanghai, China. The Asia Pacific headquarters and technical center facility
contains power train dynamometers and vehicle braking test cells among other processes. The
location allows for increased technical support to power train and vehicle customers as well as
technology development.
Federal-Mogul acquired Daros Group in June 2010, a privately owned supplier of
pistons for large bore engines used in industrial energy generation and commercial shipping.
The acquisition of the group included operations in China, Sweden and Germany. The purchase
of Daros added two-stroke and four-stroke piston ring products to Federal-Mogul’s portfolio of
industrial piston rings.
In December 2010 Barcelona (Spain) warehouse was shut down and moved to Madrid.
In March 2012, Federal-Mogul’s board of directors announced its decision to modify the
company’s corporate structure to create separate Powertrain and Vehicle Components segments,
each with its own CEO. Rainer Jueckstock, former senior vice president of the company's
Powertrain Energy business, was named CEO for the Powertrain segment effective April 1,

10. 10
2012. In February 2014, Daniel A. Ninivaggi was appointed CEO of the Federal-Mogul Vehicle
Components segment (VCS).
In July 2012, Federal-Mogul announced a definitive agreement to purchase the BERU
spark-plug business from BorgWarner Inc.
In September 2014, the company formally announced the long pending modification
to the company's corporate structure would be a split into two separate companies, Federal-
Mogul Powertrain, and Federal-Mogul Motor parts. The Powertrain division will focus on the
manufacturing and selling of OEM auto parts while the Motor parts division focuses on selling
aftermarket parts. Each individual company has their own CEO and corporate level staff that
will continue to report to the board of directors of Federal-Mogul Holding Corporation. The
company expects the split to be completed in the first half of 2015 pending regulatory approval.
In 2014, Honeywell completed the $155 million sale of its friction materials business to Federal
Mogul Corp.

11. 11
MILESTONES
1954 Incorporated as a JV with Goetze Werke
1957 Ring & liner production Patiala
1958 Piston production as escorts (Automotive
Division) (Collaboration:Mahle)
Patiala
1960 Cast iron / Forged piston production started Patiala
1968 Pins / ring carrier production started Patiala
1977 Piston / ring production started Bengaluru
1982 Steel rings / Large bore locomotive piston Bengaluru
1985 Light alloy products Patiala
1989 Auto thermic pistons production Bengaluru
1990 Moly coated / IKA / chrome oil rings Patiala
1992 Large bore rings / pistons for battle tanks Bengaluru
1994 Composite pistons / new ring foundry Bengaluru
1996 Escorts (Automotive Division) hived off into joint venture with M/S Mahle,
Germany
1997 Goetze TP (India) Ltd. - Manufacturer of steel rings
2001 Merger of Federal-Mogul sintered products Ltd. with Goetze (India) Ltd.
2003 Merger of Escorts pistons activities with Goetze (India) Ltd.
2004 Introduction of chrome-ceramic rings
2004 Technical collaboration for pistons with Federal-Mogul Corporation
2006 Majority stakeholding acquisition by Federal-Mogul Corporation
2006
Name changed "Goetze (India) Limited" to "Federal-Mogul Goetze (India)
Limited"

12. 12
BOARD OF DIRECTORS
Designation Name
Chairman & Director Mr. K.N. Subramaniam
Managing Director Mr. Andreas Kolf
Whole Time Director-Legal and Company Secretary Dr. Khalid I. Khan
Director Mr. Bernhard Motel
Director Mr. Mukul Gupta
Director Ms. Janice Ruskey Maiden
Director Mr. Mahendra Goyal
FINANCIAL PROFILE OF THE COMPANY (in lacs.)
2015(15-month) 2013 2012 2011
Total Income 1,70,452.08 126832.80 131370.48 126312.25
Depriciation 8937.31 6613.55 6193.52 5365.89
Profit before Tax 4745.73 3035.85 (1383.93) 4864.01
Taxation 1610.19 977.29 251.82 1117.84
Profit after Tax 3135.54 2058.56 (1635.74) 3746.17
Retained profit/(loss) 3135.54 2058.56 (1635.74) 3746.17
FEDERAL-MOGUL GOETZE (INDIA) LTD SHARE HOLDING
CATEGORY NUMBER OF
SHARES
PERCENTAGE
Other companies 265129 0.48
Foreign promoters 41715454 74.98
General public 5921421 10.65
NBFC and Mutual Funds 7554202 13.58
Foreign institution 147149 0.26
Others 4827 0.01

13. 13
COMPETITORS
 Bosch
 Motherson sumi
 Amara Raja Batt
 Exide Ind
 WABCO India
 Sundaram-Clayto
 Castex Tech
 Amtex Auto
 JMT Auto
 Horizone Intra

14. 14
OBJECTIVE OF STUDY
 To study the profitability of Federal Mogul Goetze Patiala- my objective of doing
financial analysis was to know the profitability of the company with the help of analysis.
 To ascertain the financial position and operating strengths and weaknesses of the
concern by properly establishing relationship between the items of the balance sheet and
remove statements.
 To study the liquidity position-by doing analysis the liquidity of company can also be
ascertained.
 By knowing this analyst is able to say how well the firm could utilize the resource of the
society in generating goods and services.
 To study operating efficiency of company-as my major is finance i wanted to learn
practical knowledge of analysis on basis of a company.
 The study has been conducted for gaining practical knowledge about Ratio analysis and
statements preparation.

15. 15
MARKETING NETWORK
Federal-Mogul Motor parts sells and distributes products under more than 20
brands in the global vehicle aftermarket, including:-
 ANCO wiper blades;
 Bentley-Harris protection solutions;
 Champion spark plugs,
 wipers and filters,
 BERU glow plugs;
 AE,
 Fel-Pro,
 Goetze,
 Nural,
 Glyco and Payen engine products;
 MOOG steering and suspension parts;
 Ferodo and Wagner brake products.

16. 16
MANAGEMENT DISCUSSION AND ANALYSIS
(a) Industry structures and developments :
Indian auto component makers faced the heat of
a global auto slowdown during first half of 2014. Due to the slipping growth in commercial
vehicle and passenger car segments, the supplies of component makers fell too. Two wheeler
and three wheeler market segments, however, witnessed strong growth.The auto industry seems
to be in recovery mode since July 2014. Indian auto components industry treads a difficult path
through an uncertain near term future. Operational excellence, scenario planning and risk
management are poised to become the key arsenal for success. The auto component industry,
globally has witnessed economic restructuring whose macro and microeconomic implications
on nations and regions has been profound. The slowdown of sales in several markets in the auto
component industry was a short-term challenge, but loss of market share to increasing
competition in the domestic markets was another key challenge for automakers over the long
term. A host of domestic factors in the form of decrease in fuel prices, and low interest rates as
compared to previous year led to increase in the demand for cars. Though, in the short term, the
global economic uncertainties and domestic monetary tightening measures had built up a near
term negative sentiment on the Indian auto component industry. However, the long term
prospects of the industry are definitely perceived as a huge opportunity area.
(b) Opportunities and Threats :
Federal-Mogul continues to support theCompany with its
technical expertise. With widely recognized brands, superior technology, strong distribution

17. 17
network and a committed team of employees, the Company is well positioned to take advantage
of the opportunities and withstand the market challenges. The Company strives to create
sustainable profitable growth by using superior technology and maintaining product quality and
offering wide range of products at competitive prices which will give us a competitive edge in
the market. A progressive leadership has given direction to the establishment. We believe our
proactive steps and consistent implementation of our plans will allow us to prepare the company
for growth as consumers regain confidence in the industry and vehicle demand increases. The
Company competes with many independent manufacturers and distributors of component parts.
Management continues to develop and execute initiatives to meet the challenges of the industry
and to achieve its strategy for sustainable global profitable growth.There are limited sets of
customers in our business, that is, the automobile manufacturers. Competition is intense, as we
compete with suppliers both in the organized and unorganized segments. Technical edge,
Specialization, innovation and networking will determine the success of the Company in this
competitive environment. Looking ahead, revenue is expected to improve, if Company is able to
pursue its strategies. The Company is employing the best practices to proactively map the
impact of its activities on its performance and profitability from economic environment and
social perspectives.
(c) Segment wise or product wise performance :
We operate mainly in two segments i.e. OEM's
and the Aftermarket (Motorparts). The Company has a balanced approach to the OEM's and
Motorparts, which helps us in capitalizing on our strengths in both segments and to respond to
market fluctuations and customer strategies.
(d) Outlook :
It has always been wafer thin margin ratesand it could not get any thicker until the
first half, with increased competition, weak sales and heavy discounts doled out by
manufacturers to attract buyers. The second half of the financial year 2015-16 may hold the key

18. 18
to success for many auto component manufacturers in India, with new launches coming up. It
would be a mixed year for the auto component industry ahead. The auto component companies
need to achieve significant productivity improvements in order to position themselves in the
industry. The Company will endeavor to revitalize in near future as consumers regain
confidence and vehicle demand increases. To remain competitive in the challenging and
demanding environment, the benchmark has to be high in anticipation of the stated and unstated
need of the customers and markets.
(e) Risks and concern :
The Company operates in an environment which is affected by various
risks some of which are controllable while some are outside the control of the Company.
However, the Company has been taking appropriate measures to mitigate these risks on a
continuous basis. Some of the risks that are potentially significant in nature and need careful
monitoring are listed hereunder:
I. Raw material prices: Our profitability and cost effectiveness may be affected due to
change in the prices of raw materials and other inputs.
II. Foreign Currency Risks: Exchange rate fluctuations may have an adverse impact on
the Company.
III. Technical Intensive Industry: The automobile industry is a technical intensive industry
and thus faced with a constant demand for new designs, knowledge of nascent
technology to meet market requirements.
IV. Cyclical nature of the Industry: The Company's growth is linked to those of the
automobile Industry, which is cyclical in nature. The demand for automobiles has a
significant impact on the demand and prices of the products manufactured by the
Company. A fall in the demand and / or prices would adversely impact the financial
performance of the Company.

19. 19
V. Increasing competition : Increasing competition across both OEM's and after market
segment, may put some pressure on market share.
VI. Excess/ short capacity: Estimation of optimal manufacturing capacities for our
products is critical to our operations. Should we for any reason, not invest in capacity
expansion in near future could result in stagnation in our sales. Conversely, in the event
we over-estimate the future demand or due to general lowering of the customer demand
due to recession, we may have excessive capacity, resulting in under utilization of assets
and/or sale of surplus products at lower margin, which could have material adverse
effect on the financial results of the company.

20. 20
SWOT ANALYSIS
 STRENGTHS
-barriers of market entry
-reduced labor costs
-high profitability and revenue
-high growth rate
-monetary assistance provided
-existing distribution and sales networks
 WEAKNESSES
-tax structure
-high loan rates are possible
-brand portfolio
-small business units
-investments in research and development
-future profitability
 OPPORTUNITIES
-new acquisitions
-growing economy
-global markets
-growth rates and profitability
 THREATS
-increasing rates of interest
-increasing costs
-rising cost of raw materials
-price changes
-growing competition and lower profitability

21. 21
ORGANIZATION STRUCTURE
CHAIRMAN
EXCECUTIVE
DIRECTOR
VICE
PRESIDENT
CHIEF (Plant
Services)
CHIEF
(Manufacturing)
CHIEF
(Finance)
CHIEF
(Stores)
CHIEF
(Personnel)
)
MANAGERS
STAFF
SUB STAFF
AND WORKERS

22. 22
CHAPTER-2
FINANCIAL STATEMENTS

23. 23
FINANCIAL STATEMENTS
A financial statement (or financial report) is a formal record of the financial activities of a
business, person, or other entity.
Relevant financial information is presented in a structured manner and in a form easy to
understand. They typically include basic financial statements, accompanied by a management
discussion and analysis:
1. A balance sheet , also referred to as a statement of financial position, reports on a
company's assets, liabilities, and ownership equity at a given point in time.
2. An income statement, also known as a statement of comprehensive income, statement of
revenue & expense, P&L or profit and loss report, reports on a
company's income, expenses, and profits over a period of time. A profit and loss
statement provides information on the operation of the enterprise. These include sales
and the various expenses incurred during the stated period.
3. A statement of cash flows reports on a company's cash flow activities, particularly its
operating, investing and financing activities.
DEFINITION:
“Financial statements are prepared for the purpose of presenting a periodical review or report on
progress made by the management and deal with the status of investment in business and the
results achieved during the period under the review.”

24. 24
CHARACTERISTICS AND NATURE OF FINANCIAL STATEMENT
The characteristics of financial statement are:
1. They relate to past period and thus are historical documents.
2. They are expressed in monetary terms.
3. They show financial position through Balance Sheet and profitability through Profit and
Loss Account.
Nature of financial statements:
It is very well known that the financial statements basically refer to balance sheets and Income
statements. Of course these two basic statements are supported by a number of schedules,
supplementary statements, explanatory notes, etc. Therefore all these are financial statements.
They show with supporting figures, earn or loss incurred during an accounting period and also
the assets, liabilities and capital at the end of the last day of the accounting period. These
statements reflect a combination of recorded facts, accounting convention and personal
judgments. It is therefore obvious that the figure included in the financial statements is
influenced by these factors. They are as follows-
1. RECORDED FACTS: Financial statements contain the fact relating to the business
transaction already recorded in the book of accounts. The unrecorded facts, whatever
important they might have not included in financial statements. The examples are human
resources, which are not shown in these statements because they are not recorded in the
books.
2. ACCOUNTING CONVENTION: Accounting convention implies certain accounting
principle which has been satisfied by the long user. In other words they refer usages and

25. 25
customary practices in social and economic life of human being which have been
generally accepted in building up the accounting principles. For examples, on account of
convention of conservation provision is made for expected losses but expected profits
are ignored. It means that the real business position of the firm is better than what is
shown in the financial statements.
3. ACCOUNTING ASSUMPTION OR CONCEPTS: GAAPs or Generally Accepted
Accounting Principles are in the form of guidelines and rules which are to be used as
standard for recording business transaction in the book of accounts and their fair
presentation in the financial statements. Because their statements have to prepare in
conformity with GAAPs, these GAAPs include principles, concepts and assumption.
Consequently the figures recorded in the financial statements are influenced by GAAP.
For examples Inventory valuation states those year-end inventories are to be valued at
lower of cost or market price. That means the value of year-end inventory which appears
in the financial statements is influenced by these principles.
4. PERSONAL JUDGMENT: It is true that Generally Accepted Accounting Principles
and concepts are followed in preparing financial statements but their application in most
of the cases depends on personal judgment of the accountant. For examples, the choice
of selecting methods of depreciation lies on the accountant. Similarly the method of
valuing inventory also depends on the personal judgment of the accountant.
OBJECTIVES OF FINANCIAL STATEMENTS:
1. Assessment of Past Performance:
Past performance is a good indicator of future performance. Investors or creditors are
interested in the trend of past sales, cost of goods sold, operating expenses, net income, cash

26. 26
flows and return on investment. These trends offer a means for judging management's past
performance and are possible indicators of future performance.
2. Assessment of current position:
Financial statement analysis shows the current position of the firm in terms of the types of
assets owned by a business firm and the different liabilities due against the enterprise.
3. Prediction of profitability and growth prospects:
Financial statement analysis helps in assessing and predicting the earning prospects and
growth rates in earning which are used by investors while comparing investment alternatives
and other users in judging earning potential of business enterprise.
4. Prediction of bankruptcy and failure:
Financial statement analysis is an important tool in assessing and predicting bankruptcy and
probability of business failure.
5. Assessment of the operational efficiency:
Financial statement analysis helps to assess the operational efficiency of the management of
a company. The actual performance of the firm which is revealed in the financial statements
can be compared with some standards set earlier and the deviation of any between standards
and actual performance can be used as the indicator of efficiency of the management.
FINANCIAL STATEMENTS INCLUDE;
1. Balance Sheet : The accounting balance sheet is one of the major financial statements used
by accountants and business owners. (The other major financial statements are the income
statement, statement of cash flows, and statement of stockholders' equity) The balance sheet is
also referred to as the statement of financial position.

27. 27
The balance sheet presents a company's financial position at the end of a specified date. Some
describe the balance sheet as a "snapshot" of the company's financial position at a point (a
moment or an instant) in time. For example, the amounts reported on a balance sheet dated
December 31, 2014 reflect that instant when all the transactions through December 31 have
been recorded.
2. Profit and Loss Account : A financial statement that summarizes the revenues, costs and
expenses incurred during a specific period of time - usually a fiscal quarter or year. These
records provide information that shows the ability of a company to generate profit by increasing
revenue and reducing costs. The P&L statement is also known as a "statement of profit and
loss", an "income statement" or an "income and expense statement".
3. Schedules and Notes to Accounts : Additional information provided in a company's
financial statements. Footnotes to the financial statements report the details and additional
information that are left out of the main reporting documents, such as the balance sheet and
income statement. This is done mainly for the sake of clarity because these notes can be quite
long, and if they were included, they would cloud the data reported in the financial statements.

28. 28
CHAPTER-3
FINANCIAL ANALYSIS

29. 29
RESEARCH METHODOLOGY
For preparing my project the information has been collected from the following sources:-
Primary data:
The Primary data has been collected from Personal Interaction with Finance manager Mr. Vikas
Gupta and other staff members.
Secondary data:
The major source of data for this project was collected through
- Balance sheet of company
- Profit and loss account
- Annual report for other financial information
Sampling design
- Sampling unit : Financial Statements.
- Sampling Size : Last two years financial statements.
FINANCIAL STATEMENT ANALYSIS
Financial statement analysis (or financial analysis) is the
process of reviewing and analyzing a company's financial statements to make better economic
decisions. These statements include the income statement, balance sheet, statement of cash
flows, and a statement of retained earnings. Financial statement analysis is a method or process
involving specific techniques for evaluating risks, performance, financial health, and future
prospects of an organization.
It is used by a variety of stakeholders, such as credit and equity investors,
the government, the public, and decision-makers within the organization. These stakeholders
have different interests and apply a variety of different techniques to meet their needs. For
example, equity investors are interested in the long-term earnings power of the organization and
perhaps the sustainability and growth of dividend payments. Creditors want to ensure the
interest and principal is paid on the organizations debt securities (e.g., bonds) when due.

30. 30
OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS
1. Assessment of Past Performance : Past performance is a good indicator of future
performance. Investors or creditors are interested in the trend of past sales, cost of goods sold,
operating expenses, net income, cash flows and return on investment. These trends offer a
means for judging management's past performance and are possible indicators of future
performance.
2. Assessment of current position : Financial statement analysis shows the current position of
the firm in terms of the types of assets owned by a business firm and the different liabilities due
against the enterprise.
3. Prediction of profitability and growth prospects : Financial statement analysis helps in
assessing and predicting the earning prospects and growth rates in earning which are used by
investors while comparing investment alternatives and other users in judging earning potential
of business enterprise.
4. Prediction of bankruptcy and failure : Financial statement analysis is an important tool in
assessing and predicting bankruptcy and probability of business failure.
5. Assessment of the operational efficiency : Financial statement analysis helps to assess the
operational efficiency of the management of a company. The actual performance of the firm
which is revealed in the financial statements can be compared with some standards set earlier
and the deviation of any between standards and actual performance can be used as the indicator
of efficiency of the management.
TOOLS OF FINANCIAL ANALYSIS
Financial statement when analyzed in isolation is not of much meaning and use. They are thus
analyzed by comparing with the financial statement of previous years or with the financial
statement of enterprise of similar nature and size operating in similar business environment or
with the industry standards. The tools used for carrying out the analysis are:
1. Comparative statements: comparative statements mean a comparative study of component
of financial statement (balance sheet and profit & loss account) of two or more years or with
that of other enterprises.
2. Common size statement: common size statement is the statements in which individual items
of financial statement of two or more years are placed and then converted into percentage taking

31. 31
a common base.
3. Ratio analysis: a ratio is an arithmetical expression of relationship between two related and
interdependent items. Accounting ratio thus, is an arithmetic relationship between two
accounting variable.
4. Cash flow statement: cash flow statement is a statement showing flow of cash and cash
equivalents during an accounting period classified under appropriate heads. It is prepared
following the accounting standard-3(revised) issued by ICAI.

32. 32
Balance Sheet as at 31 March . 2015
Schedules As at As at
31 March , 2015 31 December, 2013
Rs (in Lacs) Rs (in Lacs)
Equity and Liabilities
Shareholders’ Funds
5,563.21Share capital 5,563.21
Reserves and surplus 39,514.26 36,378.72
45,077.47 41,941.93
Non-currentliabilities
722.22Long-term borrowings 1,555.56
Deferred tax liabilities (net) 433.98 1,523.79
Other long term liabilities 396.94 278.38
Long-term provisions 6,038.65 6,165.62
7,591.79 9,523.35
CURRENT LIABILITIES
21,253.32Short-termborrow ings 18,688.57
Trade payables 22,334.88 17,553.22
Other current liabilities 2,169.79 2,521.53
Short-termprovisions 197.00 143.83
45,954.99 38,907.15
TOTAL 98,624.25 90,372.43
Assets
Non-currentassets
Fixed assets
46,767.25Tangible assets 47,391.67
Capital w ork-in-progress 5,642.20 3,319.35
Non-current investments 510.00 510.00
Long-term loans and advances 3,170.01 4,145.95
56,089.46 55,366.97
Current assets
Current investments - -
Inventories 19,790.14 14,845.27
Trade receivables 17,293.25 14,664.50
Cash and bank balances 977.21 592.80
Short-termloans and advances 3,976.76 4,502.54
Other current assets 497.43 400.35
42,534.79 35,005.46
TOTAL 98,624.25 90,372.43

33. 33
Statement of Profit and Loss for the period
(1 January 2014 to 31 March 2015)
Schedules For the period For the period
1st
January , 2014 to
31st
Macrh , 2015
1st
January , 2013
to 31st
December 2013
Rs (in
Lacs)
Rs (in
Lacs)
REVENUE
Revenue fromoperations(gross) 1,66,709.55 1,24,575.91
Less: Excise duty (13,056.65) (10,878.74)
Revenue fromoperations(net) 1,53,652.90 1,13,697.17
Increase in inventories 3,326.78 2,055.04
Other income 3,742.53 2,256.90
Total Revenue 1,60,722.21 1,18,009.11
EXPENSES
Cost of raw materialand components consumed 55,112.52 39,483.52
Purchase of traded goods 5,379.44 3,776.98
Employee benefit expense 31,949.53 23,615.72
Depreciation and amortization expenses 8,937.31 6,613.55
Finance cost 3,696.85 2,678.17
Other expenses 50,900.83 38,805.32
Total Expenses 1,55,976.48 1,14,973.26
Profit/ (loss)before exceptional items and tax 4,745.73 (3,035.85)
Exceptional items - -
Profit/ (loss) before tax 4,745.73 3,035.85
Tax expense
Current tax 2,500.00 884.50
Tax earlier year 200.00 -
Deferred tax (1,089.81) 92.79
Total tax expenses 1,610.19 977.29
Profit/ (loss)for the year 3,135.54 2,058.56
Earnings per equity share (Rs.) 5.64 3.70

34. 34
CHAPTER-4
ANALYSIS OF FINANCIAL
STATEMENTS USING
TOOLS OF FINANCIALS
ANALYSIS

35. 35
COMPARATIVE BALANCE SHEET
Comparative Balance Sheet analysis is the study of the trend of the same items, group of items
and computed items in two or more balance sheets of the same company on different dates.
COMPARATIVE BALANCE SHEET AS ON 31st
MARCH 2015 AND 31st
DECEMBER 2013
PARTICULARS
CURRENT
YEAR (a)
PREVIOUS
YEAR (b)
ABSOLUTE
CHANGE
(a-b=c)
%
CHANGE
(c/b*100)
A. Fixed Assets 56,089.46 55,366.97 722.49 1.30
B. Working capital
(C.A. - C.L.)
(3420.20) (3901.69) 481.49 12.34
C. Capital Employed
(A+B)
52669.26 51465.28 1203.98 2.33
D. Less: Long Term Debts 7,591.79 9,523.35 (1931.56) 20.28
E. Shareholder’s Fund 45,077.47 41,941.93 3135.54 7.47
Represented By:
 Equity Share Capital
 Reserve and surplus
5563.21
39,514.26
5563.21
36,378.72
0000
3135.54
100
8.61
F. Shareholder’s fund 45,077.47 41,941.93 3135.54 7.47
NOTE:
Working Capital 2015 (Rs.) 2013(Rs.)
A. Current Assets 42,534.79 35,005.46
B. Current Liabilities 45,954.99 38,907.15
C. Working capital 3,420.20 3,901.69

36. 36
COMPARATIVE PROFIT AND LOSS ACCOUNT
as on 31st
March 2015
PARTICULARS 31 MAR
2015
31 DEC
2013
ABSOLUTE
CHANGE
%AGE
CHANGE
A. Revenue from net Tax
B. Other incomes
1,53,652.90
3,742.53
1,13,697.17
2,256.90
39955.73
1485.63
35.14
65.82
C. Increase in inventories 3,326.78 2055.04 1271.74 61.88
D. Total revenue
(A+B+C)
E. Expenses
- cost of material consumed
- purchase of stock in trade
- employee benefit
expenses
- finance cost
- depreciation and
amortization expense
- other expenses
160772.21
55,112.52
5,379.44
31,949.53
3,696.85
8,937.31
50,900.83
118009.11
39483.52
3776.98
23615.72
2678.17
6613.55
38805.32
42763.1
15629
1602.46
8333.81
1018.68
2323.76
12095.51
36.23
39.58
42.42
35.28
38.03
35.13
31.16
F. Total expenses 1,55,976.48 1,14,973.26 41003.22 35.66
G. Profit before exceptional
items and tax (D-F)
Exceptional items
4,745.73
-
3,035.85
-
1709.88
-
56.32
-
H. Profit before tax
Less: tax expenses
4,745.73
1,610.19
3,035.85
977.29
1709.88
632.9
56.32
64.76
I. Profit after Tax 3,135.54 2,058.56 1076.98 52.31

37. 37
Objectives of Comparative P&L Account
 To analyze the statement of two or more Years
 To analyze the increase or decrease in the income and expenditure in term of Rupees and
also the percentage.
 To review the business operations of the last year and its likely effect on the current
year’s operations.

38. 38
Common size Balance Sheet as on 31st
March 2015
PARTICULARS
31st
March
2015
31st
December
2013
%age
change of
2015
%age
change of
2013
Equity and liability
- Shareholder’s fund
- Reserve and surplus
Net current liabilities
- Long term borrowings
- Deferred tax liability
- Other long term liabilities
- Long term provision
Current liabilities
- Short term borrowing
- Trade payable
- Other current liabilities
- Short term provision
Total
5,563.21
39,514.26
722.22
433.98
396.94
6,038.65
21,253.32
22,334.88
2,169.79
197.00
98,624.25
5,563.21
36,378.72
1,555.56
1,523.79
278.38
6,165.62
18,688.57
17,553.22
2,521.53
143.83
90,372.43
5.64
40.06
0.73
0.44
0.40
6.12
21.54
22.64
2.20
0.19
100
6.15
40.25
1.72
1.68
0.3
6.82
20.67
19.42
2.79
0.16
100
Non Currents Assets
- Tangible assets
- Intangible assets
- Capital work in progress
- Noncurrent investment
- Long term loans and
advances
Current assets
- Current investment
- Inventory
- Trade receivables
- Short term
- Other currents assets
Total
46,767.25
-
5,642.20
510.00
3,170.01
19,790.14
17,293.25
977.21
3,976.76
497.43
98,624.25
47,391.47
-
3,319.35
510.00
4,145.95
14,845.27
14,664.50
592.80
4,502.54
400.35
90,372.43
47.41
-
5.72
0.51
3.21
20.06
17.53
0.99
4.03
0.49
100
52.44
-
3.6
0.92
7.48
16.42
16.22
0.65
4.98
0.44
100

39. 39
Objectives of Common Size Balance Sheet
 To analyze the change in individual item of balance Sheet.
 To see the Trend of different items of assets and liabilities.

40. 40
COMMON SIZE PROFIT AND LOSS ACCOUNTS as on 31 March 2015
Objectives of Common Size P&L accounts
 To analyze the change in individual item of income statement.
 To study the trend on different items of income and expenses
PARTICULARS Amt Rs.
2015
Amt Rs.
2013
% age
change
of 2015
% age
change
of 2013
I. Revenue for operations
Less: excise duty
II. Revenue from operation
(net)
III. Increase in inventories
Other incomes
1,66,709.55
(13,056.65)
1,53,652.90
3,326.78
3,742.53
1,24,575.91
(10,878.74)
1,13,697.17
2,055.04
2,256.90
100
7.83
92.16
1.99
2.24
100
8.73
91.26
1.64
1.811
Total revenue
IV. Expenses
- Cost of RM
- Purchase of traded goods
- Employees benefit expenses
- Depreciation and
amortization
- Finance cost
- Other expenses
Total expenses
1,60,722.21
55,112.52
5,379.44
31,949.53
8,937.31
3,696.85
50,900.83
1,55,976.48
1,18,009.11
39,483.52
3,776.98
23,615.72
6,613.56
2,678.17
38,805.32
1,14,973.26
93.07
33.05
3.23
19.16
5.36
2.21
30.53
93.56
93.07
31.69
3.03
18.95
5.30
2.14
31.14
92.29
V. Profit(loss) before
Exceptional items
4,745.73
-
3,035.85
-
2.84
-
2.43
-
VI. Profit or loss before tax 4,745.73 3,035.85 2.84 2.43
Tax expenses:
- Current tax
- Minimum alternate
- Deferred tax
- Total tax
2,500.00
200.00
(1,089.81)
1,610.19
884.50
-
92.79
977.29
1.49
0.11
0.65
0.96
0.71
-
0.07
0.78
Profit after tax 3,135.54 2,058.56 1.88 1.65

41. 41
.
RATIO ANALYSES
(A) CURRENT RATIO
The current ratio is a financial ratio that measures whether or not a firm has enough resources to
pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.
(2015) (15months)
C.R. = current assets / current liabilities
= 42,534.79 / 45,954.99
= 0.92
(2013)
C.R. = assets / current liabilities
=35,005.46 / 38,907.15
= 0.89
INTERPRETATION
Current ratio express as a quotient current ratio which express the relationship between current
assets and current liabilities according to the books it shows the best ratio is 2:1 but in a
companies the best ration in automobiles the ratio is 1:0.75 but in this company. Current ratio is
0.92 also better.
(B) PERCENTAGE OF RETURN ON INVESTMENT
Return on investment (ROI) is the benefit to the investor resulting from an investment of some
resource. A high ROI means the investment gains compare favorably to investment cost. As a
performance measure, ROI is used to evaluate the efficiency of an investment or to compare the
efficiency of a number of different investments. In purely economic terms, it is one way of
considering profits in relation to capital invested.
(2015)
% of ROI =Profit before interest and tax /Capital employed*100
= 4,745.73/52669.26 * 100
=9.01%

42. 42
(2013)
% of ROI = Profit before interest and tax / Capital employed * 100
= 3035.85/51465.28 * 100
=5.01%
INTERPRETATION
This ratio shows the relationship of profit with the capital employed. The net result of the
operations of Business is either profit or loss. The fund used by the Business to earn this profit
or loss are proprietors funds and loans.
( C ) PERCENTAGE OF PROFIT BEFORE TAX TO SALES
The net profit percentage is the ratio of after-tax profits to net sales. It reveals the remaining
profit after all costs of production, administration, and financing have been deducted from sales,
and income taxes recognized.
(2015)
% of PBTS = profit before tax / sales * 100
Sales =revenue from operation
(gross) + other income
=1,66,709.55+3,742.53
=170452.08
= 4,745.73/ 170452.08* 100
= 2.78 %
(2013)
% of PBTS = profit before tax / saleas * 100
Sales =revenue from operation
(gross) + other income
=124575.91+2256.90
=126832.81
3035.85 / 126832.81 * 100
= 2.40 %

43. 43
INTERPRETATION
This ratio establish the relationship of gross profit on sales to net sales of a firm which is
calculated in percentage .Any fluctuation in gross profit is the result of change either in sales or
cost of goods sold or both.
(D) PERCENTAGE OF PROFIT AFTER TAX TO SALES
A financial performance ratio, calculated by dividing net income after taxes by net sales. A
company's after-tax profit margin is important because it tells investors the percentage of money
a company actually earns per rupee of sales. This ratio is interpreted in the same way as profit
margin - the after-tax profit margin is simply more stringent because it takes taxes into account.
(2015)
% of PATS = profit after tax / sales * 100
= 3,135.54 / 170452.08* 100
= 1.839 %
(2013)
% of PATS = profit after tax / sales * 100
=2058.56 / 126832.81 * 100
= 1.623 %
INTERPRETATION
This ratio establishes the relationship between net profit and sales it shows the percentage of
net profit earned on sales. Net profit computed by deducting all the direct and indirect costs.
The net profit is an indicator of overall efficiency of the business. Higher the net profit ratio is
better the business.
The ratio helps in determining the operational efficiency of the business.
EARNING PER SHARE
The portion of a company's profit allocated to each outstanding share of common stock.
Earnings per share serve as an indicator of a company's profitability.

44. 44
(2015)
EPS = net profit after tax / no. of shares
= 313554000 / 55632130
= Rs. 5.64
(2013)
EPS = net profit after tax / no. of shares
=20585600 / 5563210
= Rs.3.70
INTERPRETATION
It is a earning of a company attributable to the equity share holders. This ratio measures the
earnings available to the equity share holders on per share basis.
This ratio helps in evaluating the prevailing market price of share on the light of a profit of
earning capacity. The more earning per share better is the performance and prospects of the
company
CASH FLOW STATEMENT
The official name for the cash flow statement is the statement of cash flows. The statement of
cash flows is one of the main financial statements. (The other financial statements are the
balance sheet, income statement, and statement of stockholders' equity.)
The cash flow statement reports the cash generated and used during the time interval specified
in its heading. The period of time that the statement covers is chosen by the company. For
example, the heading may state "For the Three Months Ended December 31, 2014" or "The
Fiscal Year Ended September 30, 2014".

45. 45
Cash flow statement for the period ended 31 March, 2015
PARTICULARS 31 March 2015
(Rs) in lacs
31 Dec 2013
(Rs.)in lacs
A. Cash flow from operating activities
Profit/(loss) before tax
Adjustments for:
 Depreciation and amortization
 Loss on sale/discard of fixed assets
 Provision for doubtful debts
 Provision for doubtful debts written back
 Advances written off
 Interest income
 Dividend income
 Interest expenses
 Excess provision written back
 Unrealized forex (gain)/loss (net)
4,745.73
8,937.31
115.40
1,031.27
(303.40)
160.30
(138.62)
(347.00)
3,473.12
(883.11)
385.42
3,035.85
6,613.55
196.37
9.39
(6.68)
155.26
(94.81)
(357.00)
2,678.17
(269.07)
283.63
Operating profit before working capital changes
Movements in working capital:
 Decrease/(increase)in trade/other receivables
 Decrease/(increase)in inventories
 Decrease/(increase)in trade/other payables
17,166.42
(1,409.62)
(4,944.87)
4,227.33
12,244.66
(2,064.95)
1,499.18)
1,596.60
Cash generated from operations
Direct taxes paid (net of refunds)
15,039.26
(4,309.81)
10,277.13
(682.90)
Net cash from operating activities 10,729.45 9,594.23
B. Cash flow from investing activities
 Purchase of fixed asset/intangible assets
 Proceeds from sale of fixed assets
 Movement in restricted cash
 Proceeds from sale of investment
 Interest received
 Dividends received
 Movement in fixed deposit
(10,444.85)
252.67
15.31
876.44
108.05
357.00
0.25
(8,269.33)
47.03
(240.06)
-
70.10
357.00
-
Net cash used in investing activities (8,835.13) (8,050.26)
C. Cash flow from financing activities
 Long term borrowing taken/(repaid)
 Movement in borrowing(short term)
 Interest paid
(611.11)
2,564.75
(3,447.99)
1,600.00
(332.73)
(2,658.73)
Net cash used from/(used in) financing activities (1,494.35) (1,391.46)
Net increase in cash and cash equivalents (A+B+C)
Cash and cash equivalents at the beginning of the
year
399.97
180.25
167.51
12.74
Cash and cash equivalents at the end ofthe year 580.22 180.25
Components ofcash and cash equivalents

46. 46
Cash and cheques on hand
With banks-on current account
Balance held as margin (original maturity upto 3months)
0.01
580.21
-
9.33
155.83
15.09
580.22 180.25
LIMITATION OF STUDY
- The only limitation of study was limited interaction with the concerned heads due to
their busy schedule.
- In this company the summer training is given by the department head and they use to be
very busy in their routine work.
- But my mentor was always ready to help me regarding my queries and to provide me
with any financial information.

47. 47
CONCLUSION
The past months of my internship have been very instructive for me. Federal Mogul has offered
me opportunities to learn and develop myself in many areas. I gained a lot of experience,
especially in the financial analysis field. A lot of the tasks and activities that I have worked on
during my internship are familiar with what I’m studying at the moment. I worked in many
areas where I did different work. This gave me the chance to find out which areas I want work
in after my education. By financial analysis, I had to do lots of research where I had to find the
best way of analysis. I learned many things about finance department working from my mentor.
I learned how the financial activities occur. Before my internship started my ideas did not match
the experiences have gained during my internship. Usually we learn how to describe the work in
projects, where in work you learn how to implement them in reality. This internship was
definitely an introduction to the actual work field for me. I have learned to work in a business
organization and apply my knowledge into practice. I learned a lot from the different interns
that I have been working with during my internship. My mentor during my internship was Mr.
Vikas Gupta who helped me to learn a lot during my internship. He has also lots of knowledge
in the working area that is Finance. I have tried to learn as much as possible from him. He had
always time to answer all my questions concerning my internship. I appreciate all the advice he
gave me during my internship. Interning at federal mogul was definitely a learning experience.

48. 48
SOURCE
 http://www.federalmogulgoetzeindia.net/web/patiala.htm
 http://www.federalmogul.com/en-US/Pages/Home.aspx
 http://www.accountingtools.com/definition-financial-statemen
 http://www.accountingcoach.com/terms/F/financial-statements
 http://www.accountingtools.com/financial-statement-analysis
 http://www.investopedia.com/terms/f/financial-statement-analysis.asp
 http://www.moneycontrol.com/competition/federalmogulgoetze/compariso
n/FMG
 Analysis of financial statements by T.S. Grewal
 Annual report of federal mogul