Ratio Analysis of Amararaja Batteries

A study on Ratio Analysis
RATIO ANALYSIS
INTRODUCTION:
Financial analysis is the process of identifying the financial strengths and

weaknesses of the firm by properly establishing relationship between the items of the
balance sheet and profit & loss account. Management should be particularly interested in
knowing financial strengths and weaknesses of the firm to make their best use and to be
able to spot out financial weaknesses of the firm to take their suitable corrective actions.
Financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures.
NATURE OF RATIO ANALYSIS:
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the

indicated quotient of mathematical expression” and as “the relationship between two or
more things”. A ratio is used as benchmark for evaluating the financial position and
performance of the firm. The relationship between two accounting figures, expressed
mathematically, is known as a financial ratio. Ratios help to summaries large quantities
of financial data and to make qualitative judgment about the firm’s financial
performance.
The persons interested in the analysis of financial statements can be grouped

under three heads owners (or) investors who are desire primarily a basis for estimating
earning capacity. Creditors who are concerned primarily with liquidity and ability to pay
interest and redeem loan within a specified period. Management is interested in evolving
analytical tools that will measure costs, efficiency, liquidity and profitability with a view
to make intelligent decisions.
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STANDARDS OF COMPARISION:
The ratio analysis involves comparison for a useful interpretation of the financial
statements. A single ration in itself does not indicate favorable or unfavorable condition.
It should be compared with some standard. Standards of comparison may consist
of:
PAST RATIOS: Ratios calculated from the past financial statements of the same firm.
COMPETITORS RATIOS: Ratios of some selected firms, especially the most

progressive and successful competitor, at the same point of time.
INDUSTRY RATIOS: Ratios of the industry to which the firm belongs.
PROJECTED RATIOS: Ratios developed using the projected, or pro forma, financial
statements of the same firm.
TIME SERIES ANALYSIS:
The easiest way to evaluate the performance of a firm is to compare its present
ratios with past ratios. When financial ratios over a period of time are compared, it is
known as the time series analysis or trend analysis.
CROSS SECTIONAL ANALYSIS:
Another way to comparison is to compare ratios of one firm with some selected
firms in the industry at the same point in time. This kind of comparison is known as the
cross-sectional analysis.
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INDUSTRY ANALYSIS:
To determine the financial condition and performance of a firm, its ratios may be
compared with average ratios of the industry of which the firm is a member. This type of
analysis is known as industry analysis.
PROFORMA ANALYSIS:
Sometimes future ratios are used as the standard of comparison. Future ratios can
be developed from the projected, or pro forma, financial statement. The comparison of
current or past ratios with future ratios shows the firm’s relative strengths and
weaknesses in the past and the future. If the future ratios indicate weak financial
position, corrective actions should be initiated.
USERS OF FINANCIAL ANALYSIS:
Financial analysis is the process of identifying the financial strengths and

weaknesses of the firm by properly establishing relationship between the items of the
balance sheet and the profit & loss account. Financial analysis can be undertaken by
management of the firm, or by parties outside the firm, viz. owners, creditors, investors
and others. The nature of analysis will differ depending on the purpose of the analyst.
 TRADE CREDITORS are interested in firm’s ability to meet claims over a very
short period of time. Their analysis will, therefore, confine to the evaluation of
the firm’s liquidity position.
 SUPPLIERS OF LONG-TERM DEBT are concerned with the firm’s long term
solvency and survival. Long term creditors do analyze the historical financial
statements, but they place more emphasis on the firm’s projected or pro forma,
financial statements to make analysis about its future solvency and profitability.
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 INVESTORS, who have invested their money in the firm’s shares, are most
concerned about the firm’s earnings. They restore more confidence in those firms
that show steady growth in earnings. As such, they concentrate on the analysis of
the firm’s present and future profitability. They also interested in the firm’s
financial structure to the extent it influence the firm’s earnings ability and risk.
 MANAGEMENT of the firm would be interested in every aspect of the financial
analysis. It is their overall responsibility to see that the resources of the firm are
used most effectively, and that the firm’s financial condition is sound.
CLASSIFICATION OF RATIOS:
So many ratios, calculated from the accounting data can be grouped into various
according to financial activity or function to be evaluated. The parties interested in
financial analysis are short and long creditors, owners and management. Short-term
creditor’s main interest is in the liquidity position or the short-term solvency of the firm.
Long term creditors are interested in long-term solvency and profitability of the firm.
Owners concentrate on the firm’s profitability and financial condition. Management is
interested in evaluating every aspect of the firm’s performance. In view of the
requirement of the various users of ratios, we may classify them into the following four
important categories.
 LIQUIDITY RATIOS
 LEVERAGE RATIOS
 ACTIVITY RATIOS
 PROFITABILITY RATIOS
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LIQUIDITY RATIOS:
Liquidity ratios measure the ability of the firm to meet its obligations. Liquidity
ratios help in establishing a relationship between cash and other current assets to current
to current obligations to provide a quick measure of liquidity. A firm should ensure that
it does not suffer from lack of liquidity and also that it does not have excess liquidity. A
very high degree of liquidity is also bad, idle assets earn nothing. The firm’s funds will
be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper
balance between high liquidity.
 CURRENT RATIO
 QUICK RATIO
 CASH OR SUPER QUICK RATIO
 NET WORKING CAPITAL RATIO
LEVERAGE RATIOS:
The short-term creditors, like bankers and suppliers of raw material, are more
concerned with the firm’s current debt-paying ability. On the other hand, long-term
creditors, like debenture holders, financial institutions are more concerned with the firm’s
long-term financial strength. To judge the long-term financial position of the firm,
financial leverage, or capital structure, ratios are calculated. These ratios indicate mix of
funds provided by owners and lenders. There should be an appropriate mix of debt and
owner’s equity in financing the firm’s assets.
The process of magnifying the share holders return through the use of debt is
called “financial leverage” or “financial gearing” or “trading on equity”.
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 DEBT RATIO
 DEBT EQUITY RATIO
 TOTAL LIABILITIES RATIO
ACTIVITY RATIOS:
Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilities its assets. These ratios are also called turnover ratios because they
indicate the speed with which assets are being converted or turned over into sales.
Activity ratios thus involve a relationship between sales and assets. A proper balance
between sales and assets generally reflects that assets are managed well. Activity ratios
help to judge the effectiveness of asset utilization.
o INVENTORY TURNOVER RATIO

o DEBTORS TURNOVER RATIO
o FIXED ASSETS TURNOVER RATIO
o WORKING CAPITAL TURNOVER RATIO
PROFITABILITY RATIOS:
A company should earn profits to survive and grow over along period of time.
Profits are essential but it would be wrong to assume that every action initiated by
management of a company should be aimed at maximizing profits. Profit is the
difference between revenues and expenses over a period of time.
Profitability ratios are calculated to measure the operating efficiency of the
company. Besides management of the company, creditors and owners are also interested
in the profitability of the firm. Creditors want to get interest and repayment of principal
regularly.
Generally, two major types of profitability ratios are calculated:
• Profitability in relation to sales
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• Profitability in relation to investment.

 GROSS PROFIT MARGIN
 NET PROFIT MARGIN
 RETURN ON EQUITY
 OPERATING EXPENSES RATIO
 EARNINGS PER SHARE
LIQUIDITY RATIOS:
1.CURRENT RATIO:
The current ratio is an acceptable measure of the firm’s short term solvency.
Current assets include cash within a year, such as marketable securities, debtors and
inventories. Prepaid expenses are also included in current assets as they represent the
payments that will not be made by the firm in the future. All the obligations maturing
with in a year are included in current liabilities. Current liabilities include creditors, bills
payable, accrued expenses, short-term bank loan, income-tax liability and long-term debt
maturing in the current year.
The current ratio is a measure of the firm’s short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. A current
ratio of 2:1 is considered satisfactory. The higher the current ratio, the greater the margin
of safety; the larger the amount of current assets in relation to current liabilities, the more
the firm’s ability to meet its obligations. It is a crude-and-quick measure of the firm’s
liquidity.
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2. QUICK RATIO:
Quick ratio establishes a relationship between quick, or liquid, assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or reasonably
soon without a loss of value. Cash is the most liquid asset, other assets which are
considered to be relatively liquid asset, other assets which are considered to be relatively
liquid and included in quick assets are debtors and bills receivables and marketable
securities (temporary quoted investments).
Generally a quick ratio of 1:1 is considered to penetrating test of liquidity than the
current ratio, yet it should be used cautiously. A company with a high value of quick
ratio can suffer from the shortage of funds if it has slow-paying, doubtful and long
duration outstanding debtors. A low quick ratio may really be prospering and paying its
current obligation in time.
3. CASH RATIO:
Since cash is the most liquid asset, a financial analyst may examine cash ratio and
its equivalent current liabilities. Trade investment or marketable securities are equivalent
of cash; therefore, they may be included in the computation of cash ratio.
If the company carries a small amount of cash there is nothing to be worried about
the lack of cash if the company has reserves borrowing power. In India, firms have credit
limits sanctioned from banks, and easily draw cash. Cash ratio is calculated as cash
marketable securities divided by current liabilities.
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4. NETWORKING CAPITAL RATIO:
The difference between the current assets and current liabilities excluding short-
term bank borrowings is called networking capital or net current assets. Sometimes it is
used to measure firm’s liquidity. If the firm is having NWC has the greater ability to
meet its current obligations.
LEVERAGE RATIOS:
1. DEBT RATIO:
Several debt ratios may be used to analyze the long-term solvency of a firm. The
firm may be interested in knowing the proportion of the interest-bearing debt (also called
funded debt) in the capital structure. It may, therefore, computer debt ratio by dividing
total debt by capital employed or net assets. Total debt will include short and long-term
borrowings from financial institutions, debentures/bonds, deferred payment arrangements
for buying capital equipments, bank borrowings, public deposits and any other interest
bearing loan. Capital employed will include total debt and net worth.
A high ratio means that claims of creditors are greater than those of owner. A
high level of debt introduces inflexibility in the firm’s operations due to the increasing
interference and pressure from creditors.
2. DEBT EQUITIY RATIO:
Debt equity ratio indicates the relationship describing the lenders contribution for
each rupee of the owner’s contribution is called debt-equity ratio. Debt equity ratio is
directly computed by dividing total debt by net worth. Lower the debt-equity ratio higher
the degree of protection. A debt-equity ratio of 2:1is considered ideal.
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3. TOTAL LIABILITIES RATIO:
Total liabilities ratio indicated the relationship between total assets and total
liabilities. In this we know the wealth of the organization and satisfying the shareholders.
ACTIVITY RATIOS:
Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilizes its assets. These ratios are also called turnover ratios because they
indicate the speed with which assets are being converted or turned over into sales.
Activity ratios thus involve a relationship between sales and assets. A proper balance
between sales and assets generally reflects that assets are managed well. Activity ratios
help to judge the effectiveness of asset utilization.
1) INVENTORY TURNOVER RATIO:
Inventory turnover ratio indicates the efficiency of the firm in producing and
selling its product. It is calculated by dividing the cost of goods sold by the average
inventory.
2) DEBTORS OR ACCOUNTS RECEIVABLE TURNOVER RATIO:
A firm sells goods for cash and credit. Credit is used as marketing tool by a
number of companies. When the firm extends credits to its customers, debtors are
created in the firm’s account. Debtors turnover indicates the number of times debtors
turnover each year. The higher the value of debtor’s turnover, the more efficient is the
management of credit. Debtor’s turnover is found out by dividing credit sales by average
debtors.
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3) FIXED ASSETS TURNOVER RATIO:
The firm may wish to know its efficiency of utilizing fixed assets and current
assets separately. The use of depreciated value of fixed assets in computing the fixed
assets turnover may render comparison of firm’s performance over period or with other
firms.
4) WORKING CAPITAL TURNOVER RATIO:
A firm may also like to relate net current assets or net working capital to sales.
Working capital turnover ratio indicates for one rupee of sales the company needs how
many net current assets. This ratio indicates whether or not working capital has been
effectively utilized in market sales.
A company should earn profits to survive and grow over a long period of time.
Profits are essential but it would be wrong to assume that every action initiated by
management of a company should be aimed at maximizing profits. Profit is the
difference between revenues and expenses over a period of time.
Profitability ratios are calculated to measure the operating efficiency of the

company. Besides management of the company, creditors and owners are also interested
in the profitability of the firm. Creditors want to get interest and repayment of principal
regularly.

 Profitability in relation to sales.
 Profitability in relation to investment.
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1. GROSS PROFIT MARGIN:
The first profitability ratio in relation to sales is the gross profit margin the gross
profit margin reflects the efficiency with which management produces each unit of
product. This ratio indicates the average spread between the cost of goods sold and the
sales revenue. When we subtract the gross profit margin from 100 percent, we obtain the
ratio of cost of goods sold to sales. A high gross profit margin ratio is a sign of good
management. A gross margin ratio may increase due to any of the following factors:
higher sales prices cost of goods sold remaining constant, lower cost of goods sold, sales
prices remaining constant.
2. NET PROFT MARGIN:
Net Profit is obtained when operating expenses, interest and taxes are subtracted
from the gross profit. Net profit margin ratio establishes a relationship between net profit
and sales and indicates management’s efficiency in manufacturing, administering and
selling the products. This ratio is the overall measure of the firm’s ability to turn each
rupee sales into net profit.
3. OPERATING EXPENSES RATIO:
The operating expenses ratio explains the changes in the profit margin ratio It is
affected by a number of factors, such as external uncontrollable factors, internal factors.
This ratio is computed by dividing operating expenses by sales. Operating expenses
= cost of goods sold plus selling expenses and general administrative expenses by sales.
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4. RETURN ON EQUITY (ROE):
A return on shareholder’s equity is calculated to see the profitability of owner’s

investment. ROE indicates how well the firm has used the resources of owners. This
ratio is one of the most important relationships in financial analysis. The earning of
satisfactory return is the most desirable objective of a business.
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INDUSTRY PROFILE
A battery is an electrochemical device in which the free energy of a chemical
reaction is converted into the electrical energy. The chemical energy contained in the
active materials is converted into electrical energy by means of electrochemical
oxidation-reduction reactions.
How a Battery Works?
When you place the key in your car’s ignition and turn the ignition switch to
“ON” a signal is sent to the car’s battery. Upon receiving this signal the car battery takes
energy that it has been strong in chemical form and releases it as electricity. This electric
power is used to crank the engine. The battery also releases energy to power the car’s
lights and others accessories.
It is the only device, which can store electrical energy in the form of chemical
energy, and hence it is called as a storage battery.
Sealed Maintenance Free (SMF) Batteries:
Sealed Maintenance Free (SMF) batteries technologies are leading the battery
industry in the recent year in automobile and industrial sector around the globe.
SMF batteries come under the rechargeable battery category so it can be use a
number of times in the life of a battery. SMF batteries are more economical than nickel
cadmium batteries.
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Value Regulated Lead Acid (VRLA) Batteries:
VRLA batteries are leak proof, spill-proof and explosion-restraint and having life
duration of 15-20 years. These batteries withstand the environmental conditions due to
high technology, in built in the batteries. Each cell is housed in a power coated steel tray
making them convenient to transport and installation, so transit damages are minimized
in case of these batteries.
Sealed Maintenance Free (SMF) batteries and Value Regulated Lead Acid
(VRLA) batteries technology are leading the battery industry in the recent years in
automobile and industrial battery sector around the globe VRLA batteries have become
the preferred choice in various applications such as uninterrupted power supply,
emergency lights, security systems and weighing scales.
Classification of Batteries:
Batteries are broadly classified into two segments like,

 Automotive Batteries
 Industrial Batteries
Automotive Batteries:
Apart from mopeds all other automobiles including scooters need storage battery.
So automotive batteries are playing pre-dominant role in automobile sector by
influencing customers in the automobile market. Automobile batteries can be further
distinguished as the original equipment (OE) markets as low as 5-6%. OE segment has
the advantage of securing continuous orders and inquiries. This enables manufacturers to
streamline production facilities, plan production schedules and attain certain level of
operational efficiency.
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INDUSTRIAL BATTERIES:
The Industrial Battery segment comprises of two main categories. One comprises
of the “Stationery Segment” and the second relating to “Motive Power and Electric
Vehicles”. The Motive Power and the Electric Vehicle segment comprising of “Telecom,
Railways and Power Industries have registered a growth in excess of 20% and this trend
is likely to continue in the next 5 years.
The Industrial Segment is highly technological intensive and access to high

quality world-class technology is an important factor and is vital for brand reference. The
total demand for the industrial battery segment is met by indigenous production with a
small saves of about 10% by imports. The demand for industrial batteries has grown
slowly and steadily.
RECYCLING BATTERIES:
Battery acid is recycled by neutralizing it into water of converting it to sodium

sulphate for laundry detergent, glass and textile manufacturing.
Cleaning the battery cases, meeting the plastic and reforming it into uniform
pellets recycle plastic. Lead, which makes up 50% of every battery, is method, poured
into slabs and purified.
The following are the major manufacturers in battery industry in India,

 Exide Industries
 Standard Batteries
 Amco Batteries
 Tudor India
 Amara Raja Batteries Ltd.
 Hyderabad Batteries Ltd.
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Sealed Maintenance Free (SMF) batteries and Value Regulated Lead Acid
(VRLA) technologies are leading the battery industry in the recent years in the preferred
choice in various applications such as uninterrupted power supply, emergency lights,
Security systems and Weighing scales.
TELECOM:
The Government’s policy to increase the capacity from 10 million to 21 million

lines by 2000 increased the demand for storage batteries considerably the value added
services like radio paging and cellular will increase the demand for storage batteries in
future considerably.
RAILWAYS:
In Railways, the demand estimate is based on the annual coach production this
comes to 2500 numbers by Railways itself and 1000 numbers more by various other
segments, replacement demand and annual requirement for railways electrification.
POWER SECTOR:
In this sector, the estimated 90 private power projects which are expected to
produce 40,000MV with an approximate capital outlay of Rs.1,40,000 crores would keep
the industry’s future brighter in the coming years.
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COMPANY PROFILE
The introduction of company can be described in two parts
 Company Details
 Company Overview
COMPANY DETAILS
Company Name: Mangal Precision Products Private Limited (MPPL)
(Mangal Precision Products Private Limited is having two units)
MPPL - 1
Address: karakambadi
Tirupathi – 517501
Andhra Pradesh, India
Ph.No. 0877-2285561 to 65
Fax No. 0877-2285600
MPPL – 2
Address: Petamitta (village)
Puthalapattu (Mandal)
Chittoor District
Andhra Pradesh, India
Ph.No. 0877-2271161 to 65
Fax No. 0877-2271167
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Mangal Precession Products Private Limited – 1
MPPL – 1 is a fabrication division. It commenced its business in the year 1992.
Manufactures
 Metal sheets
 Battery trays
 Racks
 Charger cabinets
 Accessories
Customers
 ARBL
 ARPSL
 AREL
 Others
The product range includes trays and racks for batteries. Cabinets for chargers
ranging size from 125-100-235 mm to 2400-1400-1600 mm as per customers’
requirements. Products are manufactured as per specifications given by customers.
The company also provides after sales services to meet the customers need MPPL
– 1 factory around 400 personnel. The factory is spread over 0.75 acres with a current
built-up area of 5000 square meters.
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Mangal Precession Products Private Limited – 2
MPPL – 2 is a fastener’s division. It commenced its business in the year 1996. but
actual production started in 1997.
Manufactures:
 Mild steel fasteners

 Stainless steel fasteners
 Stainless steel fasteners
 High tensile fasteners
 Copper and brass fasteners
 Ms Bolts
 Ms Sheets
Customers:
 ARBL
 ARPSL
 AREL
 TATA MOTORS
 Ashok Leyland
 Others
MPPL- 2 factory around 300 personnel and trained them. The factory is spread
over an area of 5000 squares meters with a current built up area of 3600 square meters
factory spread over 2.35 areas. Even MPPL-2 manufactures its products as per customer
specifications.
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COMPANY OVERVIEW
Mangal Precision Products Limited
Located at Tirupati, MPPL is the group’s subsidiary for the precision engineering
products business and it has three divisions within its fold
 Auto Components
 Enclosures
 Storage Solutions
MPPL plays a strong emphasis on top- of –the-line business and operational

practices such as 5S, Six Sigma and Poka Yoke with rewarding results in efficiency,
productivity and cost effectiveness.
AUTO COMPONENTS
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MANGAL develops and manufactures Auto Components like High tensile

fasteners, Cold forged parts and Engineering Plastic parts. We have been serving ALL,
TATA Johnson Controls, Rane Group, Godrej, Bosch, SAME Deutz and Royal Enfield
for their requirements in Fasteners and Plastic parts. The manufacturing facility is based
at Tirupati and the plant facility is ISO 9001:2000, ISO/TS 16949:2002 and ISO
14001:2004 certified by TUV.
As a reliable development partner in the automotive industry, we are capable of

covering a range of applications including critical applications for engines, drive trains,
fasteners for chassis, car seating system and battery parts in plastics.
The products solutions include,
 High Tensile Fasteners
 Cold Forged Parts
 Engineering Plastics
HIGH TENSILE FASTENERS
MANGAL develops and produces Standard and Special Screws and Bolts,
precision Cold Forged parts and assemblies, in which cold forged parts are combined
with other components. We endeavor to be a full service supplier and manufacturer in the
diameter range from M5 to M20 with a maximum part length of 300mm. We have
experience in various grades of steel right from 8.8 to 12.9 and also special material like
Stainless steel and Boron Steel.
As a reliable development partner in the automotive industry, we are capable of

covering a range of applications including critical applications for engines, drive trains
and chassis.
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Typical Range of Fasteners includes
Standard Fasteners
Hexagon Screws/Bolts, Cross Recessed Screws, Flange Screws, Socket Head Cap
Screws/Bolts
Special Fasteners
Connecting Rod Bolts, Main bearing Cap Bolts, Cylinder Head Screws/Studs,
Flywheel Bolts, Adjusting Screws, Balance Weight Bolts, Banjo Bolts, Hub/Wheel Bolts,
Wheel Studs, Suspension Bolts, Propeller Shaft Bolts, Center Bolts, Track Shoe Bolt.
Aside addressing cold forged fasteners we provide value added service by

converting the bar machined parts into cold forged parts by converting the wire rods into
near net shape of the final product by cold forging and machine the near net shape part to
final precision turned parts. Some of the parts include Double end studs, Max cut screws,
Banjo bolts and Threaded inserts, resulting in a cost effective solution especially for long
production runs.
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MANGAL can also address any special fasteners/ net shape parts by playing
actively as a technical liaison or assume responsibility as “C” parts aggregator on a need
basis enabled by its alliance with key associates like NEDSCHROEF.
The manufacturing facility is a completely integrated one spanning Wire

Preparation including Phosphating and Wiredrawing, Annealing, Cold Forging,
continuous mesh belt Heat Treatment furnace, Secondary Machining, Finishing and
Packing all under one roof.
COLD FORGED PARTS
Cold forging is performed on reliable and precision machinery such as

NEDSCHROEF and JERN YAO.
The plant facility is ISO 9001:2000, ISO/TS 16949:2002 and ISO 14001:2004
certified by TUV.
PRODUCTS
A wide range of standard cold forged high tensile fasteners over 6,000 varieties
covering the diameter range of 3 mm to 16 mm and the length range of 6 mm to 150 mm.
We manufacture a wide range of fasteners based on the following standards:
 Indian Standards-IS
 German Standards-DIN
 Japanese Standards-JIS
 American Standards-ASTM
 British Standards-BS
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MPPL's product range encompasses a wide variety of standard, chassis, engine

and special fasteners. These Fasteners covers a very wide range of industries viz
Automobile sectors, standard / special m/c building sectors, printing machineries, etc.
IT Server Racks
Mangal produces a range of enclosures for IT & ITES applications for Server
rooms and Networking hubs. The most widely used 19” racks come in a variety of
heights up to 42U size. It is available in depths of 600mm, 800mm, 1000mm or 1200mm.
Accessories like Shelves, Keyboard trays, Cable, Thermal and Power

management, Fan trays, cooling fans etc add to the complete solution.
 Floor standing cabinets of 30U, 36U and 42U with 600mm and 800mm
width.
 Wall mounted enclosures of 6U, 9U and 12U for LAN/WAN application.
 Conforms to DIN 41494 standards.
Telecom Racks
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Mangal cabinets for Telecom applications conform to ETSI standards. These

cabinets come in a standard height of 2200mm and depth of 600mm. Mangal also makes
Outdoor cabinets with IP-65 protection for custom telecom applications.
 ETSI Cabinets.
 Custom made Outdoor enclosures.
 Ingress Protection up to IP-55/65 standards
Industrial Cabinets
Mangal has wide experience in executing complex work in Automation & Control
panel applications. From small interface panels to large process automation in industries,
Mangal has always lived-up to the precision requirement expected by the industry.
 Industrial Control & Automation Panels
 Power Control Cabinets
 Interface Panels
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 Cabinets with Ingress protection up to IP553/56 standards
Custom Products
With a most Modern Fabrication Shop, In-house Design Center and Skillful
Engineering Manpower, Mangal can offer solutions for any complex sheet metal product
applications.
Some of the recent applications we catered include,
 Thermal Insulation Panels.
 Mezzanine floor panels for extra heavy duty application.
 MCC Panels
 Consoles
STORAGE SOLUTIONS & AUTOMATION DIVISION
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 Pallet Racking Systems
 Shelving System
 Automation System
AR-DX Pallet Racking Systems
AR-DX Racking systems are designed to increase the Warehouse Operational

efficiency, Productivity and Goods Turnaround.
These systems come with a host of accessories like Guided Pallet Supports, Rear
Stoppers for Pallets, Aisle labels, Upright Guards, Fill in Mesh, etc. Very versatile and
flexible, these can be easily reconfigured to accommodate changing storage needs of your
warehouse.
Our Racking range includes,
 Conventional Pallet Racking
 Drive-In Racking
 Gravity Flow Racking
 Push Back Racking
 Mobile Pallet Racking
Benefits of our Racking
 Suitable for Medium to Heavy load
 Easy to assemble
 50mm level adjustment for beams
 Wide range of accessories
 Powder coated finish offers good resistance to abrasion
 Rack Clad structures eliminate the need of separate warehouse building
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Conventional Pallet Racking
Conventional Pallet Racking is the simplest of all Pallet Racking systems and
provides individual access to every pallet in the system. The flip side is low storage
density with only 35-40% of floor space being utilized. This is because aisles have to be
provided for the handling equipments like forklifts to maneuver.
Features
 Most versatile pallet storage system with easy adaptability
 The beam levels can be easily adjusted in increments of 50mm according
to the pallet height requirement.
 Host of accessories for individual storage needs
 Compatible with a variety of handling equipments like Pedestrian Lift
Trucks, Forklifts, Reach trucks, VNA Trucks and Automated Stacker
Cranes
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Double Deep Racking
This is a modified layout of our Conventional Pallet Racking where two bays of
racks are installed one behind another and accessed using Modified Reach Trucks in a
front and rear pallet combination.
This reduces aisle to rack ratio and gives better floor space utilization (around
55%) and higher storage density. The flip side is that it reduces selectivity and only 50%
pallets are directly accessible.
Gravity Flow Racking
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Gravity Flow Racking is a specialized form of Pallet Racking where inclined

tracks of rollers are used as storage surface and Pallets are put-away from one end and
retrieved from the other end of the racks. It is typically 4-5 pallets high and the depth
depends on size and weight of the pallet. It is necessary that the loads on pallets are stable
and quality of pallets is good
Push Back Racking
Push Back Racking is a modified Pallet Racking system where pallets are loaded
on inclined tracks or roller skids where the inclination is towards the forklift. The system
offers storage upto 4 pallet deep and 5 pallets high with put-away and retrieval from the
same side.
Mobile Pallet Racking
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Our Mobile Pallet Racking is a modified Pallet racking system where the racks
are mounted on powered movable bases running on rails flush with the floor. The rack
bases are moved to create the aisle for the forklift to access the pallets.
AR-DX Shelving System
AR-DX Shelving systems are designed to suite accurate manual picking of

products following “man-to-goods” principal.
Page 32
These systems comes with a host of accessories like Shelf Dividers, Partition
panels, Doors with lock, Drawers & Cabinets, etc. enabling endless possibilities for
customization to suit individual storage needs. They can also be made multiple floors
high connected by staircases.
Mobile Shelving
In Mobile shelving, shelves are mounted on mobile bases which slide on rails on
floors. The system is good for highly dense storage and ensures order and security of
goods stored
AMARA RAJA GROUP OF COMPANIES:
 AMARA RAJA POWER SYSTEMS PRIVATE Ltd. (ARPSL), Karakambadi,
Tirupati.
 AMARA RAJA BATTERIES PRIVATE Ltd. (ARBL), Karakambadi, Tirupati.
 MANGAL PRECISION PRODUCTS PRIVATE Ltd1. (MPPL1), Karakambadi,
Tirupati.
 MANGAL PRECISION PRODUCTS PRIVATE Ltd2. (MPPL2), Petamitta,
Chittoor.
Page 33
 AMARA RAJA ELECTRONICS PRIVATE LIMITED (AREPL),
Dighavamgham, Chittoor.
 GALLA FOODS PRIVATE LIMITED (GFPL), Puthalapattu Mandal, Chittoor.
QA – ARBL
Manager
P.Murali
NEED FOR THE STUDY
Financial forecasting is an integral part of financial planning. Forecasting uses

past data to estimate the future financial requirements. Ratio analysis is a powerful tool
of financial analysis. A ratio is used as a benchmark for evaluating the financial position
and performance of the firm. Ratios help to summarizes large quantities of financial data
and to make qualitative judgment about the firm’s financial performance. With the help
of ratios, one can determine.
 The ability of the firm to meet its current obligations.

 The extent to which the firms has used its long – term solvency by borrowing
funds.
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 The efficiency with which the firm is utilizing its assets in generating sales
revenue.
 The overall operating efficiency and performance of the firm.
Analysis and interpretation of various accounting ratios gives a skilled and

Experienced analyst, a better understanding of the financial condition and performance of
the firm.
Thus ratio analysis can assist management in its basic function of forecasting,
planning, coordination, control and communication
OBJECTIVES OF THE STUDY
 To analyze the financial performance of. Man gal precision products private ltd.
 For drawing conclusions regarding the liquidity position of a firm.
 To determine the long-term financial solvency of a firm through ratio analysis.
 To analyze the effectiveness in the utilization of assets.
Page 35
RESEARCH METHODOLOGY
Research
Any effort which is directed to study the strategy needed to identify the problem
and selecting of best solution for better results is known as research.
Research methodology
Page 36
A system of models, procedures and techniques used to find the results of a research
problem is called research methodology.
Research design
A research design is an arrangement of conditions for collection and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in
procedure.
A research design is purely and simply the framework and plan for the study that
guides the collection and analysis of data. It is a blue print that is followed in completing
a study
Data Collection Methods

 Primary Data Collection Method
 Secondary Data Collection Method
In this study the primary data collection method have been used to collect data.
SOURCES OF DATA:
Primary data-
The primary data is collected from personnel interviews and discussions with
execution.
Secondary data-
The secondary data is collected from the

Page 37
• Annual financial reports of the company

• Internet reports
• Brochures and books.
These are sources containing data, which have been collected and compiled for
another purpose. The secondary sources consists of readily available compendia
and already compiled statistical statements and reports whose data may be used by
researches for their studies, e.g., census reports, annual reports and financial
statements of companies
FINANCIAL TOOLS:
The data relating to the performance of Man gal precision products private ltd
drawn from the different sources have been carefully and meaning fully analyzed by
using well established and financial tools.
CLASSIFICATION OF RATIOS:
So many ratios, calculated from the accounting data can be grouped into various
according to financial activity or function to be evaluated. The parties interested in
Page 38
financial analysis are short and long creditors, owners and management. we may classify
them into the following four important categories.
 LIQUIDITY RATIOS
 LEVERAGE RATIOS
 ACTIVITY RATIOS
 PROFITABILITY RATIOS
LIQUIDITY RATIOS:
Liquidity ratios measure the ability of the firm to meet its obligations. Liquidity
ratios help in establishing a relationship between cash and other current assets to current
to current obligations to provide a quick measure of liquidity.
1. CURRENT RATIO:
CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITIES
2. QUICK RATIO:
QUICK RATIO = CURRENT ASSETS-INVENTORIES

CURRENT LIABILITIES
3. CASH RATIO:
CASH RATIO = CASH+MARKETABLE SECURITES

CURRENT LIABILITIES
Page 39
4. NETWORKING CAPITAL RATIO:
NETWORKING CAPITAL RATIO = NETWORKING CAPITAL

NET ASSETS
LEVERAGE RATIOS:
The short-term creditors, like bankers and suppliers of raw material, are more
concerned with the firm’s current debt-paying ability.
1. DEBT RATIO:
DEBT RATIO = TOTAL DEBT
TOTAL DEBT + NETWORTH
2. DEBT EQUITIY RATIO:
DEBT-EQUITY RATIO = TOTAL DEBT

NET WORTH
3 .TOTAL LIABILITIES RATIO:
TOTAL LIABILITIES
TOTAL LIABILITIES RATIO = TOTAL ASSETS
ACTIVITY RATIOS:
Activity ratios are employed to evaluate the efficiency with which the firm manages
and utilizes its assets.
1. INVENTORY TURNOVER RATIO:
INVENTORY TURNOVER RATIO SALES

AVERAGE INVENTORY
Page 40
AVERAGE INVENTORY = OPENING + CLOSING INVENTORY

2
2. DEBTORS OR ACCOUNTS RECEIVABLE TURNOVER RATIO:
DEBTORS TURNOVER = CREDIT SALES

AVERAGE DEBTORS
3. FIXED ASSETS TURNOVER RATIO:
FIXED ASSETS TURNOVER RATIO = SALES

FIXED ASSETS
4. WORKING CAPITAL TURNOVER RATIO:
WORKING CAPITAL TURNOVER RATIO = SALES

NET CURRENT ASSETS
A company should earn profits to survive and grow over a long period of time.
Profit is the difference between revenues and expenses over a period of time.
 Profitability in relation to sales.
 Profitability in relation to investment.
1. GROSS PROFIT MARGIN:
Page 41
GROSS PROFIT MARGIN = SALES – COST OF GOODS SOLD

SALES
2. NET PROFT MARGIN:
NET PROFIT MARGIN = PROFIT AFTER TAX

SALES
3. OPERATING EXPENSES RATIO:
OPERATING EXPENSES RATIO = OPERTING EXPENSES

SALES
4. RETURN ON EQUITY (ROE):
RETURN ON EQUITY = PROFIT AFTER TAXES

NETWORTH
SCOPE OF THE STUDY
• This ratio analysis study is on Mangal Precision Products Ltd only.

• The information what I need for the study is collected from the company’s
finance manager and from annual reports of the company.
• My study is constrained to the information which is provided by the company.
• The secondary data i.e., Balance sheets and profit & loss accounts are the base for
this study.
Page 42
• If the values of the balance sheets causes the wrong analysis.
Page 43
LIMITATIONS OF THE STUDY
 The study is based on the information provided by the organization in the form of
various annual reports only.
 The study is based on only the balance sheets and profit & loss accounts of the
company.
 Ratio analysis only provides a glimpse of the past performance and forecasts for
future may not be correct since several other factors like market conditions.
Management policies etc may affect the future operations.
 The ratio facilitates wholly quantitative analysis only. The qualitative factors
which are so important for the successful functioning of the organization are
completely ignored.
 Ratio analysis suffers from the serious limitations of the statistical concepts such
as determinations of proper standard for comparison.
 Ratio analysis helps in providing only a part of the information needed in the
process of decision – making.
Page 44
LIQUIDITY RATIOS
1. CURRENT RATIO: -
The ratio between all current assets and all current liabilities; another way of
expressing liquidity. It is a measure of the firm’s short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. A ratio of
greater than one means that the firm has more current assets than current claims against
them.
Formula: Current Assets

Current Liabilities
Table no: 1 current ratio

Standard ratio is 2:1
CURRENT
YEAR CURRENT ASSETS CURRENT RATIO
LIABILITIES
2004-05 33,894, 349 27,138,593 1.24:1
2005-06 49, 397,942 24,404,997 2.02:1
2006-07 125,658,719 69,630,463 1.80:1
2007-08 304,999,890 177861294 1.71:1
2008-09 455,742,126 260,088,191 1.75:1
INTERPRETATION:
The standard norm for current ratio is 2:1. During the year 2005 the ratio is 1.24
and it has increased to 2.02 during the year 2006 and decreased to 1.80 in 2007 and it is
decreased to 1.71 in the year 2008 and it has decreased to 1.75 in the year 2009. So the
ratio was not satisfactory.
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2. QUICK RATIO: -
The ratio between all assets quickly convertible into cash and all current
liabilities. Specifically excludes inventory.
Formula: Current Assets – Inventories

Current Liabilities
Table no: 2 quick ratios
Standard ratio is 1: 1
CURRENT
YEAR QUICK ASSETS QUICK RATIO
LIABILITIES
2004-05 27,913,828 27,138,593 1.02:1
2005-06 40,869,967 24,404,997 1.67:1
2006-07 83,916,683 69,630,463 1.20:1
2007-08 208,208,252 177,861,294 1.17:1
2008-09 330,199,379 260,088,191 1.27:1
INTERPRETATION:
The standard norm for the quick ratio is 1:1. Quick ratio is 1.02 in the year 2005
And it is increased to 1.67and1.20 in the year 2006 and 2007.And it is decreased to 1.17
in the year 2008and increased to1.27 in the year 2009. However the ratio was above the
standard norm so the ratio was satisfactory.
3. CASH RATIO: -
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The ratio between cash plus marketable securities and current liabilities.
Formula: Cash & Bank balances

Current liabilities
Table no:3 cash ratio
standard ratio is 0.5:1
CASH&BANK CURRENT
YEAR CASH RATIO
BALANCES LIABILITIES
2004-05 18,003,083 27,138,593 0.66:1
2005-06 15,664,761 24,404,997 0.64:1
2006-07 19,989,626 69,630,463 0.28:1
2007-08 24,175,629 177,861,294 0.13:1
2008-09 61,157,640 260,088,191 0.23:1
INTERPRETATION:
In all the above years the absolute quick ratio is very low. The standard norm for
absolute quick ratio is 0.5:1 the company is failed in keeping sufficient Cash & Bank
Balances and Marketable Securities.
4. NET WORKING CAPITAL RATIO: -
The difference between current assets and current liabilities excluding short-term
bank borrowing is called net working capital or net current assets.
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Formula: Net Working Capital

Net Assets
Table no:4 net working capital ratio
NET WORKING NET WORKING

YEAR NET ASSETS
CAPITAL CAPITAL RATIO
2004-05 6,869,969 221.355.246 0.03:1
2005-06 11,367,220 264,504,761 0.04:1
2006-07 42,402,531 337,735,853 0.12:1
2007-08 113,512,871 492,258,996 2.30:1
2008-09 192,653,935 733,924,377 0.26:1
INTERPRETATION:
Net Working Capital ratio is 0.03 in 2005and it is increased to 0.04 in the next
year i.e., 2006. From that year the ratio increased to 0.04 in 2006 and followed in 2007
also increased 0.12 and also 2.30 in 2008 but condition of business working capital is
shortage except 2008 and again it decrease to 0.26 in 2009.
LEVERAGE RATIOS
5. DEBT RATIO: -
If the firm may be Interested in knowing the proportion of the interest bearing
debt in the capital structure.
Page 48
Formula: Total debt

Total debt + Net worth
Total debt = Secured & UN Secured loans

Net Worth= Share holders funds – misc expenses
Table no: 5 debt ratio
TOTAL DEBT + NET

YEAR TOTAL DEBT DEBT RATIO
WORTH
2004-05 114,925,660 203,592,315 0.56:1
2005-06 111,545,855 242,170,949 0.46:1
2006-07 130,554,086 309,647,248 0.42:1
2007-08 202,412,086 455,186,403 0.44:1
2008-09 310,713,028 682,490,489 0.45:1
INTERPRETATION:
This ratio gives results relating to the capital structure of a firm. From the above
in fluctuating trend we can conclude that the company’s dependence on debt is
increasing. It is not better position in collection of debt.
6. DEBT EQUITY RATIO: -
Shows the ratio between capital invested by the owners and the funds provided by
the lenders.
Formula: Total Debt

Net Worth
Table no:6 debt equity ratio
Page 49
YEAR TOTAL DEBT NET WORTH D.E.RATIO

2004-05 114,925,660 88,666,655 1.29:1
2005-06 111,545,855 130,625,094 0.85:1
2006-07 130,554,086 179,093,162 0.72:1
2007-08 202,412,086 252,774,317 0.80:1
2008-09 310,713,028 371,777,461 0.83:1
INTERPRETATION:
The ratio gives results relating to the capital structure of a firm. Debt equity ratio is
1.29 in the year 2005 and decreased to 0.85 in the year 2006. In the year 2007 the ratio
has decreased to 0.72 and it increased to 0.80&0.83in the gradual years. We can conclude
that the company depends on the debt fund is increasing.
7. TOTAL LIABILITIES RATIO: -
Formula: Total Liabilities

Total Assets
Total liabilities: Current liabilities + Secured & Unsecured Loans.

Total Assets : Fixed assets + Investments + Current assets
Table no: 7 total liabilities ratio
TOTAL
YEAR TOTAL ASSETS T.L. RATIO
LIABILITIES
2004-05 142,064,253 216,489,607 0.6
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2005-06 135,950,852 286,523,151 0.4

2006-07 200,184,549 403,717,278 0.4
2007-08 380,273,380 670,120,290 0.5
2008-09 570,801,218 724,830,857 0.7
INTERPRETATION:
In the years, 2005 & 2006 the total liabilities is 0.6&0.4 but in the year 2007 the
total liabilities decreased to 0.4 and the ratio increased to 0.5 & 0.7 in the corresponding
years of 2008 &2009.
ACTIVITY RATIOS
8. INVENTORY TURNOVER RATIO: -
It indicates the firm efficiency of the firm in producing and selling its product.
It is calculated by dividing the cost of goods sold by the average inventory.
Formula: sales
Average inventory
Table no: 8 inventory turnover ratio
Page 51
AVG
YEAR sales I.T.RATIO
INVENTORY
2004-05 9,438,244 6,070,863 1.5
2005-06 18,160,031 7,254,248 2.5
2006-07 58,389,926 25,135,004 2.3
2007-08 736,541,123 69,266,837 10.6
2008-09 1,276,752,957 124,642,747 10.24
INTERPRETATION:
Inventory turnover ratio is 1.5 times in the year 2005. But, it is increased to 2.5
in the year 2006. Then, it is decreased to 2.3 in the year 2007 and increased to 10.6 in the
year 2008. But, it is decreased to 10.24 in the year 2009. Inventory turn over ratio
increased for year by year that is company production is also increased. Subsequently
sales are also increased.
9. DEBTORS TURNOVER RATIO: -
It is found out by dividing the credit sales by average debtors. Debtor’s turnover
indicates the number of times debtor’s turnover each year.
Formula: Sales
Average debtors
Sales = Gross Sales
Table no: 9 debtors turnover ratio
AVERAGE
YEAR SALES D.T.RATIO
DEBTORS
2004-05 9,438,244 2,207,265 4.2
2005-06 18,160,031 8,056,599 2.2
2006-07 58,389,926 17,996,034 3.2
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2007-08 736,541,123 60,833,804 12.1

2008-09 1,276,752,957 181,063,357 7.05
INTERPRETATION:
Debtor’s turnover ratio is 4.2 times in the year 2005 and it is decreased to 2.2
times in the year 2006 and increased to 3.2 times in the year 2007 and it increased to 12.1
times in the year 2008 and decreased to7.05 times in 2009.
10. FIXED ASSETS TURNOVER RATIO: -
The firm may whish to know its efficiency of utilizing fixed assets and
current assets separately. The use of depreciated value of fixed assets in computing the
fixed assets turnover may render comparison of firm’s performance over period or with
other firms.
Formula: Sales
Net fixed assets
Sales = Gross Sales

Net fixed assets: Net block
Table no: 10 fixed assets turnover ratio
YEAR SALES NET FIXED ASSETS F.A.T.RATIO

2004-05 9,438,244 182,595,258 0.05
Page 53
2005-06 18,160,031 237,125,209 0.07

2006-07 58,389,926 278,058,559 0.20
2007-08 736,541,123 365,120,400 2.01
2008-09 1,276,752,597 515,551,197 2.47
INTERPRETATION:
Fixed assets turnover ratio is 0.05 in the year 2005 and it is increased to 0.07 in
the year 2006. In the year 2007 the ratio is 0.20 and it continued up to 2.01 and to 2.47 in
the years 2008&2009.
11. WORKING CAPITAL TURNOVER RATIO: -
A firm may also like to relate net current assets or net working capital to sales.
Working capital turnover indicates for one rupee of sales the company needs how many
net current assets. This ratio indicates whether or not working capital has been effectively
utilized market sales.
Formula: Sales
Net Current Assets
Table no: 11 working capital turnover ratio
NET CURRENT
YEAR SALES W.C.T. RATIO
ASSETS
2004-05 9,438,244 6,869,969 1.37
2005-06 18,160,031 11,367,220 1.59
2006-07 58,389,926 42,402,531 1.37
2007-08 736,541,123 113,512,871 6.48
2008-09 1,276,752,597 195,653,935 6.52
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INTERPRETATION:
Working capital turnover ratio is 1.37 in the year 2005 and it is increased to 1.59
in the year 2006. In the year 2006 decreased to 1.37 and it increased to 6.48 &6.52 in the
next two years 2008&2009. The higher the working capital turnover the more favorable
for the company.
PROFITABILITY RATIOS
12. GROSS PROFIT MARGIN: -
Indicator of how much profit is earned on your products without consideration

of selling and administration costs.
Formula: Gross profit X 100

Sales
Gross Profit: Sales – Cost of goods sold
Table no: 12 gross profit margin
YEAR GROSS PROFIT SALES G.P. RATIO (%)

2004-05 7,464,375 70,021,938 10.6
2005-06 54,577,760 129,761,262 42.06
2006-07 85,572,165 217,610,149 39.32
2007-08 123,829,045 736,541,123 16.81
2008-09 197,533,409 1,276,752,957 15.47
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INTERPRETATION:
From the above we can say that gross profit ratio is 10.6% in the year 2005 but it
increased to 42.06 %&39.32% in 2006& 2007 and it decreased to 16.81 % in the year
2008 and it is decreased to 15.47 % in the year 2009. The company is maintaining proper
control on trade activities.
13. NET PROFIT MARGIN: -
Shows how much profit comes from every dollar of sales.
Formula: Profit after tax X 100

Sales
Table no: 13 net profit margin
PROFIT AFTER NET PROFIT

YEAR SALES
TAX MARGIN (%)
2004-05 988,237 70,021,938 1.41
2005-06 38,958,439 129,761,262 30.02
2006-07 48,471,758 217,610,149 22.27
2007-08 74,513,415 736,541,123 10.11
2008-09 119,003,145 1,276,752,957 9.32
INTERPRETATION:
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During the year 2005 the net profit margin 1.41% and increased to 30.02in the year
2006. In the next year, it gradually decreased to 22.27 in the year 2007and to 10.11 in
2008 and to 9.32 in the year 2009.
14. OPERATING EXPENSES RATIO: -
The operating expenses ratio explains the changes in the profit margin ratio. A
higher operating expenses ratio is unfavorable since it will leave a small amount of
operating income to meet interest, dividends.
Formula: Operating expenses X 100

Sales
Operating expenses =Admin expenses+ Selling expenses
Table no: 14 operating expenses ratio
OPERATING
YEAR SALES O.E. RATIO
EXPENSES
2004-05 4,434,725 70,021,938 6.3
2005-06 5,322,708 129,761,262 4.1
2006-07 12,851,161 217,610,149 5.9
2007-08 22,785,265 736,541,123 3.0
2008-09 38,725,408 1,276,752,957 3.0
INTERPRETATION:
Page 57
Operating expenses ratio is 6.3%of sales in the year 2005 it decreased to 4.1% in
the year 2006 and increased in 2007 to 5.9% and it decreased in the next two years
2008&2009 to 3.0% subsequently.
Net Profit Margin
15. RETURN ON EQUITY RATIO: -
Determines the rate of return on your investment in the business. As an owner or

shareholder this is one of the most important ratios as it shows the hard fact about the
business—are you making enough of a profit to compensate you for the risk of being in
business.
Formula: Profit after tax X 100
Net worth
Table no: 15 return on equity ratio
PROFIT AFTER
YEAR NET WORTH R.O.E.RATIO (%)
TAX
2004-05 988,237 88,666,655 1.11
2005-06 38,958,439 130,625,094 29.82
2006-07 48,471,758 179,093,162 27.06
2007-08 74,513,415 252,774,317 29.47
2008-09 119,003,145 371,777,461 32.00
INTERPRETATION:
Return on equity is 1.11 in the year 2005 and again it increased to 29.82 in the
year 2006. Return on Equity of the company is at satisfactory level and then it decreased
Page 58
to 27.06 in 2007 and again increased to 27.47 in 2008.And increased to 32.00% in the
year 2009.
FINDINGS
 Except in the year 2005-06, the company is not maintaining current ratio as more
than 2 i.e., in the remaining years the company not reached the standard ratio. It
shows that the company is not strong in short term liabilities repayment.
 The company is maintaining quick assets over the quick ratio. As the company
having quick assets above the quick ratio, so quick assets would meet quick
liabilities.
 The company is failed in keeping sufficient cash & bank balances and marketable
securities.
 By observing current assets ratio are better in the year 2005-06 only. In
the same way by observing the absolute and super quick ratio the company
cash performance is in down position.
 The debt ratio’s are not much increase or decrease.

 Net working capital ratio is 0.12 in the year 2007 and 2.30 in the year 2008. It is
increasing trend so the business working capital ratio is good position. .
 Debt Equity ratio is increasing and decreasing by year by year .so the company
not depends on the debt funds fully.
 Total liabilities ratio is increasing from 2004-05 to 2007-08
 Inventory turnover ratio increased by year to year that is company production
sales are also increased.
Page 59
 The net profit ratio of the company increasing over the study period. Hence the
organization having the good control over the operating expenses.
SUGGESTIONS
 The company g .p. ratio was decrease from 39.32 % to 16.81 % in the year 2006-
07 to 2007-08.respectively so it has to improve profit the g .p .ratio.
 By considering the profit maximization in the company the earning per share,
investment and working capital also increases. Hence, the outsiders are interested
to invest there amount in the company
 The company should maintain sufficient cash and bank balances; they should
invest the idle cash in marketable securities or short term investments in shares,
debentures, bonds and other securities.
 The net profit of the company is in fluctuating in all the years. Hence the
organization should excuse its control on its expenses. Then only it can improve
its net profit.
Page 60
CONCLUSIONS
Liquidity ratios, both current ratio and quick ratio are showing effectiveness in
liquidity as in all the years current ratio is not greater than the standard 2:1 and quick
ratio is also not greater than the standard 1:1 ratio. The firm is maintaining a low cash
balance and marketable securities which means they done cash payments. Debt equity
ratios are showing an average increase in the long term solvency of the firm. Fixed assets
turnover ratio is showing that the firm needs lesser investment in fixed assets to generate
sales.
The increasing trend of current assets turnover ratio indicates that the firm needs
more investment in current assets for generating sales. The gross profit ratio, net profit
ratio is showing the increasing trends. The profitability of the firm the increasing
Operating ratio of the company has observed decreasing trend, hence it may be good
control over the operating expenses. The company financial performance is very good
and also they will increase their business year by year by expanding their branches.
Page 61
BALANCE SHEET AS AT 31 MARCH 2005
Particulars As at 31.03.2005 As at 31.03.2004

Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital 3,803,500 3,803,500
Reserves & Surplus 84,863,155 85,851,394
Loan Funds
Secured Loans 100,267,121 62,911,726
Unsecured Loans 14,658,539 14,541,702
Deferred Tax liability 17,762,931 17,762,931

Total 221,355,246 184,871,253
APPLICATION OF FUNDS
Fixed Assets
Gross Block 215,888,399 183,076,692
Less: Depreciation 33,293,141 23,135,030
Net Block 182,595,258 159,941,662
Capital Work-in-Progress 32,004,232 21,879,262
Investments 13,625,725 13,625,725

Current Assets, Loans & Advances
Inventories 5,980,521 6,161,205
Sundry Debtors 3,631,690 782,840
Cash & Bank Balances 4,377,358 3,879,120
Loans, Advances & Deposits 6,279,054 7,342,992
Other Current Assets - 20,268,624 - 18,166,157
Less: Current Liabilities &

27,138,593
Provisions
Liabilities 28,741,553
Provisions
Net Current Assets 6,869,969 10,575,396
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Misc. Expenditure -- --
Total 221,355,246 184,871,253
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2005
Year Ended on 31.03.05 Year Ended on 31.03.04

Particulars
Rupees Rupees
INCOME
Sales 9,438,244 7,379,216
Job work charges 60,583,694 43,606,633
Other Income 959,836 858,426
Increase / (Decrease) in stocks 712,471 787,738
Total 71,694,245 52,629,013
Expenditure
Raw Material Consumed 17,053,807 15,475,342
Payments & Benefits to Employees 19,424,712 17,690,847
Mfg., Selling Admn., & 11,199,326
7,981,696
Other Expenses 4,434,725
4,202,237
Taxes & Licenses 223,631
284,972
Financial charges 10,221,362 3,689,583
Depreciation 10,158,111 6,638,011
Total 72,715,674 55,962,688
Profit Before Taxation (1,021,429) (3,333,675)
Add: Excess provision in earlier
33,192 1,431
years
Less: provision for taxation -- --
Differed tax liability -- 5,084,625
Short provision in earlier 1,481,252 --
Profit After Taxation (988,237) ( 9,898,121)
Profit / (loss) b/f from previous years 36,578,034 46,476,155
Profit available for appropriation 36,578,034
35,589,797
Less: Transfer to General Reserve
Net profit carried to balance sheet
35,589,797 36,578,034
Page 63

SOURCES OF FUNDS
Shareholders Funds
Share Capital 6,803,500 3,803,500
Loan Funds
Secured Loans 96,195,022 100,267,121
Unsecured Loans 15,350,834 14,658,539

Total 264,504,763 221,355,246
Fixed Assets
Gross Block 282,585,075 215,888,399
Net Block 237,125,209 182,595,258
Investments 13,625,725 13,625,725

Inventories 8,527,973 5,980,521
Sundry Debtors 12,481,508 3,631,690
35,772,215 - 20,268,624

24,404,996 27,138,593
Provisions
--
Total 264,504,763 221,355,246
Page 64

Particulars
Rupees Rupees
INCOME
9,438,244
Sales 18,160,031
60,583,694
Job work charges 111,601,231 959,836
712,471
Total 129,761,262 71,694,245
Expenditure
Mfg.,& Selling Admn., & 16,907,278 11,199,326
Other Expenses 5,322,708 4,434,725
Taxes & Licenses 4,051,678 223,631
Depreciation 12,166,722 10,158,111
Total
85,936,007
43,825,255
Profit from operations 72,715,674
1,029,696
Add: prior period income
1,433,219
Other income
Profit Before Taxation 46,288,170 (1,021,429)
1,402,470 33,192
years
Less : provision for taxation 3,895,149 --
Deferred tax liability 4,570,882 --
Provision for fringe benefit tax
Short provision of income tax 257,095
1,481,252
of earlier years 9,074
Profit After Taxation 38,958,439 (988,237)

Profit brought forward
35,589,797 36,578,034
Year from Previous
Profit available for appropriation 74,548,236
35,589,797
--
Balance carried to Balance Sheet 74,548,236 35,589,797
Page 65
Page 66

SOURCES OF FUNDS
Shareholders Funds
Share Capital 6,803,500 6,803,500
Loan Funds
Secured Loans 113,934,439 96,195,022
Unsecured Loans 16,619,647 15,350,834

Total 337,735,853 264,504,763
Fixed Assets
Gross Block 338,682,137 282,585,075
Net Block 278,058,559 237,125,209
Investments 13,625,725 13,625,725

Inventories 41,742,036 8,527,973
Sundry Debtors 23,510,561 12,481,508
112,032,994 35,772,215

69,630,463 24,404,996
Provisions
Total 337,735,853 264,504,763
Page 67

Particulars
Rupees Rupees
INCOME
Sales 58,389,926 18,160,031
Job work charges 159,220,223 111,601,231
Total 217,610,149 129,761,262

Expenditure
Mfg.,& Selling Admn., & Other 25,127,131 16,907,278
Expenses 13,254,632 5,322,708
Taxes & Licenses 10,774,420 4,051,678
Depreciation 15,451,421 12,166,722
Total
147,489,405 85,936,007
70,120,744 43,825,255
Profit from operations
-- 1,029,696
Add: prior period income
1,724,074 1,433,219
Other income
Profit Before Taxation 71,844,818 46,288,170
-- 1,402,470
years
Less : provision for taxation 17,468,268 3,895,149
Deferred tax liability 5,754,792 4,570,882
Provision for fringe benefit tax
150,000
Short provision of income tax 257,095
of earlier years 9,074
--
Profit After Taxation 48,471,758 38,958,439
Profit brought forward
74,548,236 35,589,797
Year from Previous
Profit available for appropriation 123,019,994 74,548,236
-- --
Balance carried to Balance Sheet 123,019,994 74,548,236
Page 68

SOURCES OF FUNDS
Shareholders Funds
Share Capital 17,008,750 6,803,500
Loan Funds
Secured Loans 178,164,815 113,934,439
Unsecured Loans 24,247,271 16,619,647

Total 492,258,996 337,735,853
Fixed Assets
Gross Block 444,006,523 338,682,137
364,774,987 278,058,559
Add : capital work in progress 345,413 3,649,038
Net block 365,120,400 281,707,597
Investments 13,625,725 13,625,725

Inventories 96,791,638 41,742,036
Sundry Debtors 98,157,048 23,510,561
291,374,165 112,032,994

177,861,294 69,630,463
Provisions
Total 492,258,996 337,735,853

Page 69

SOURCES OF FUNDS
Shareholders Funds
Share Capital 34,017,500 17,008,750
Loan Funds
Secured Loans 286,465,756 178,164,815
Unsecured Loans 24,247,271 24,247,271

Total 733,924,377 492,258,996
Fixed Assets
Gross Block 620,014,868 444,006,523
Net Block 515551197 364,774,987
Capital Work-in-Progress 9,093,519 345,413
Investments 13,625,725 13,625,725

Inventories 124,642,747 96,791,638
Sundry Debtors 181,063,357 98,157,048
Total of Current Assets - 455,742,126 287,612,725

Provisions
Liabilities 155,436,682 116,889,033
Provisions 104,651,509 57,210,756
260,088,191 174,099,789
Misc. Expenditure --
Total 733,924,377 492,258,996
Page 70

Particulars
Rupees Rupees
INCOME
Sales 1,543,800,353 924,910,348
Job work charges -- --
Less : duties and taxes 267,047,396 188,369,225
Total net sales 1,276,752,957 736,541,123
Expenditure
Increase /decrease I stocks
6,718,488 27,935,159
846,203,098 466,897,823
Raw Material Consumed

Mfg., Selling Admn., &
128,206,095 73,637,871
Other Expenses
Taxes & Licenses 380494 931,601
Depreciation 25,356,282 18,607,961
Total 1,115,623,959 631,320,039
Profit from operations 161,128,998 105,221,084
Other income 20,771,436 10,476,318
Profit Before Taxation 181,900,434 115,697,403
Less : provision for tax 47,900,000 31,800,000

Deferred tax 14,361,295 8,983,988
Provision for fringe benefits 470,000 400,000
Earlier years Tax provision 165,994 -------------
Profit After Taxation 119,003,145 74,513,415

Profit b/f from previous year 197533409 123,019,994
Profit available for appropriation 316,536,554 197,533,409
Less : proposed dividend, Transfer

-- --
to General Reserve and
-- --
Dividend tax
Net profit carried to Balance
316,536,554 197,533,409
Sheet
Page 71
BIBLIOGRAPHY
• M.Y.khan & p. k. jain (2007) financial management: Text, problems& cases, 4/e,
Tata Mcgraw-Hill publications: New delhi.
• 2.I.M. pandey (2004), financial management, 9/e, Vikas publications, New Delhi
• Prasanna Chandra (2003), financial management, 5/e, Tata Mcgraw-Hill

publication: New Delhi.
• Balla, V.K. (2006), Financial management and policy: Text and cases, 5/e,
• Anmol publications: New Delhi.
• http://www.amararaja.co.in.
Page 72

Ratio Analysis of Amararaja Batteries

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Ratio Analysis of Amararaja Batteries

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A study on Ratio Analysis

Financial analysis is the process of identifying the financial strengths and

NATURE OF RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the

The persons interested in the analysis of financial statements can be grouped

COMPETITORS RATIOS: Ratios of some selected firms, especially the most

INDUSTRY RATIOS: Ratios of the industry to which the firm belongs.

TIME SERIES ANALYSIS:

CROSS SECTIONAL ANALYSIS:

USERS OF FINANCIAL ANALYSIS:

Financial analysis is the process of identifying the financial strengths and

o INVENTORY TURNOVER RATIO

• Profitability in relation to investment.

4. NETWORKING CAPITAL RATIO:

2. DEBT EQUITIY RATIO:

3. TOTAL LIABILITIES RATIO:

1) INVENTORY TURNOVER RATIO:

2) DEBTORS OR ACCOUNTS RECEIVABLE TURNOVER RATIO:

3) FIXED ASSETS TURNOVER RATIO:

4) WORKING CAPITAL TURNOVER RATIO:

Profitability ratios are calculated to measure the operating efficiency of the

Generally, two major types of profitability ratios are calculated:

1. GROSS PROFIT MARGIN:

2. NET PROFT MARGIN:

3. OPERATING EXPENSES RATIO:

4. RETURN ON EQUITY (ROE):

A return on shareholder’s equity is calculated to see the profitability of owner’s

A battery is an electrochemical device in which the free energy of a chemical

active materials is converted into electrical energy by means of electrochemical

How a Battery Works?

Sealed Maintenance Free (SMF) Batteries:

Value Regulated Lead Acid (VRLA) Batteries:

Batteries are broadly classified into two segments like,

The Industrial Segment is highly technological intensive and access to high

Battery acid is recycled by neutralizing it into water of converting it to sodium

The following are the major manufacturers in battery industry in India,

The Government’s policy to increase the capacity from 10 million to 21 million

The introduction of company can be described in two parts

Company Name: Mangal Precision Products Private Limited (MPPL)

(Mangal Precision Products Private Limited is having two units)

Andhra Pradesh, India

Fax No. 0877-2285600

Address: Petamitta (village)

Andhra Pradesh, India

Fax No. 0877-2271167

Mangal Precession Products Private Limited – 1

MPPL – 1 is a fabrication division. It commenced its business in the year 1992.

Mangal Precession Products Private Limited – 2

actual production started in 1997.

 Mild steel fasteners

Mangal Precision Products Limited

MPPL plays a strong emphasis on top- of –the-line business and operational

MANGAL develops and manufactures Auto Components like High tensile

As a reliable development partner in the automotive industry, we are capable of

The products solutions include,

 High Tensile Fasteners

 Cold Forged Parts

HIGH TENSILE FASTENERS

As a reliable development partner in the automotive industry, we are capable of

Typical Range of Fasteners includes

Aside addressing cold forged fasteners we provide value added service by

The manufacturing facility is a completely integrated one spanning Wire

COLD FORGED PARTS

Cold forging is performed on reliable and precision machinery such as