SUBMITTED TO CALCUTTA UNIVERSITY In Partial Fulfilment of Requirements for the Degree of B.com Honours in Accounting&Finance/taxation/Marketing/Computer application.

BY

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ACKNOWLEDGEMENT
I take this opportunity as privilege to express my respect and deep sense of gratitude to Dr. K.S. Charak, Director of Navsahyadri Education society group of institute, pune for their encouragement, and valuable guidance for completing this project. I also wish to express a special thanks to all teaching and non- teaching staff members of Navsahyadri Institute. I also take the opportunity to express special thanks & respect to Mr. Rahul margaje & all staff of the Lawkim motors group. At last, I also wish to express my thanks to all who helped me to complete this project.

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STUDENT DECLARATION

I hereby declare that the project titled Study of Financial Statement & Analysis is an original piece of research work carried out by me under the guidance and supervision of Prof. ...... The information has been collected from genuine & authentic sources. The work has been submitted in partial fulfilment of the requirement of the Degree of B.com Honours to Calcutta University.

Place: Date:

Signature: Name of the student

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EXECUTIVE SUMMARY

This Project is on RATIO ANALYSIS. The management of Finance is important in any type of organization. The Financial Management is very important because it deals with the cash for run day to day business activities. Various aspects are required to be taken into consideration while calculating financial analysis & statement. The reason for selecting this topic as project is that there is lot of scope in this subject to learn various calculations. Preparation of statement, from those calculations one can find out the company is having problem in its day to day functioning & what is the current position of the company.

This project was done at Lawkim Motors Group Ltd, Tal: Khandala. This company is doing a production of different type of motors i.e. HVAC motor, general purpose, Hermetic Motor, Flame proof motor .This Company is multinational company. It has various concerns in various countries like U.S.A. This company does its business in domestic market as well as in international market; this was the basic reason for selecting this company, So that one can understand domestic as well as foreign trends in the company.

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Table of Contents

Chapter No.
1. Chapter- I

Title
Introduction

Page No.

Introduction of topic Objective of Study Significance of Study Hypothesis 2. Chapter-II Concept & Methodology

Concept Relating to Study Topic Methodology Details Sources of Data 3. 4. Chapter-III Chapter-IV Organizational Profile Data Analysis

Graphical & Tabular Representation of Data 5. Chapter-V Findings Suggestions Bibliography Summary & Conclusion

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Section-I

INTRODUCTION

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INTRODUCTION

The basic for financial analysis, planning and decision is financial information. A business firm prepares its final accounts via, Balance Sheet and Profit and Loss Account, which provided useful financial information for the purpose of decisionmaking. Financial information is needed to Predict, compare and evaluate the firms earning ability. The former Statement viz Profit and Loss Account shows the operating activities of the concern and the later Balance Sheet depicts the balance value acquire assets and liabilities at a particular point of time .However, these statements do not disclose all of the necessary and relevant information. For the purpose of obtaining the material and relevant information necessary for ascertaining the financial strength and weaknesses of an enterprise, it is necessary to analysis the data depicted in the financial analysis and planning .For instance, funds flow statement is a valuable aid to a financial manager or a creditor in evaluating the uses of funds by a firm and in determine how the firm finance those uses. In addition to studying past flow, the financial manager can evaluate future flows by means of funds statements based on forecasts.

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PROJECT OBJECTIVES
There is some important objective of project which is done in the Lawkim Motors Group.

To study the financial ratios & examine the companys financial position & profitability. To know the liquidity position of the firm. To study the capital assets financing by using leverage ratio. To estimate the working capital requirement. To draw the observation based on study & suggest suitable measures to improve performance.

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NEED AND JUSTIFICATION OF STUDY

1. This analytical study will be helpful for interpreting the financial statement. 2. This study helpful to future planning. 3. This study will provide guideline to the management investors for coming profitability. 4. The analytical study finds out the working capital position in the business and its capital used and the return on investment on capital. 5. The analytical study proves the process of the company.

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HYPOTHESIS

Financial Analysis is useful to know the Strengths & Weakness of the company. It is useful to identify financial position of company.

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Section-II

RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

What is Research...?
Research is a careful investigation or enquiry specially through search for new facts in any branch of knowledge. D. Slesinger & M. Stephenson define the research as The manipulation of things, concepts or symbols for the purpose of generalising to extent, correct or verify knowledge , whether that knowledge aids in construction of theory or in the practice of an art.

Types of Data:
Mainly there are two type of data used for research. These types are, 1. Primary Data: We collect primary data during the course of doing experiment in experimental research. We can obtain primary data either through observation or through direct communication with respondent in one form or another or through personal interview. Primary data is collected personally to be used. Primary data is first hand information collected by researcher from observation or communication.

2. Secondary Data: Secondary data means the data that are already available i.e. they refer to the data which have already been collected & analysed by someone else. These data is collected from the financial reports of the company.

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Sources & Methods of Data Collection:

There are different sources from which primary & secondary data has been collected. These are, A) Observation: Observation is most commonly used method specially in behavioural sciences. The information obtained under this method relates to what is currently happening, it is not complicated by either the past behaviour or future intensions. In observation method it is enable to record the natural behaviour of group.

B) Questionnaires: This method of data collection is quite popular. A questionnaire consists of number of questions which are mailed to respondents who are read & understand the questions & write down the reply of those questions. These types of questions are mostly used in various economic & business surveys.

C) Personal Interviews: Personal interview method requires a person known as the interviewer asking questions generally in face-to-face contact to the other person or persons. During the project work, I get chance to ask the questions to the head of finance department related to the information which is needed for project, these questions are History of the company. How many departments work in company Operations performed in company. Other information of company.

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Section-III

COMPANY PROFILE

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Company Profile
GODREJ & BOYCE MFG.CO.LTD Established in 1897
Incorporated in 3rd march 1932 under indian company act 1913

Godrej & Boyce Mfg Co. Ltd commenced operations in 1897, when a young man named Ardeshir Godrej turned his attention from the practice of law to inventing products. From this humble beginning, the company today is one of the largest privately held, widely diversified industrial corporations in India. The Godrej brand has been one of the most trusted names in the Indian marketplace for decades, as well as in select foreign markets. The flagship company of the group, Godrej & Boyce Mfg. Co. Ltd. has 14 business divisions & an all India presence with 20 branches and 50 showrooms. The Company stands for the highest ethical standards in the country, and the brand reflects integrity, respect and trust. With 7 major companies with interests in real estate, FMCG, industrial engineering, appliances, furniture, security and agri care to name a few our turnover crosses 3.3 billion dollars.

Type of Organization Register number Board of Directors -

Manufacturing Industry U28993MH1932PLC001828

Jamshyd N. Godrej Vijay M. Crishna Kyamas A. Palia Phiroz D. Lam

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MISSION:
Enriching quality of life, everyday, everywhere This is what we are committed to accomplish

VISION:
Godrej in every home and workplace This is what we aspire for

VALUES:
Integrity, Environment, Trust, To Serve, Respect An enduring source of our strength

LOCATION:
HEAD OFFICE: Pirojshanagar, Vikhroli, Mumbai, Maharashtra, India, Pin 400 079. Telephone: (022) 67961700 / 67961800 Fax: (022) 67961555

WEB ADDRESS: www.godrej.com. www.connect.godrej.com

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ORGANISATION STRUCTURE OF GODREJ:

Chairman & Managing Director

Godrej & Boyce Mfg. ctor

Executive Director Lawkim Motors

Executive Director & Head P&A

Executive Director & President

Executive Director & Head (Finance)

Lawkim Applying (SBU)

Corporate Services

Other SBUs (11)

HR

IR

ADMIN E&E (SBU) Construction (SBU) Exim Finance & Procurement Finance

Commercial

Legal

Business Excellence

Steel Procurement

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BRANCHES OF GODREJ

Businesses Divisions Appliances Construction Interio Locks PrecisionEngineering Process Equipment Storage Solutions Vending AV Solutions Argencos S.A. Electricals & Electronics Material Handling Precision Systems Security Solutions Tooling Lawkim Motors

International Entities Godrej (Malaysia) Sdn Bhd Godrej (Singapore) Pte Ltd Godrej (Vietnam) Company Ltd Godrej & Khimji (Middle East) LLC Keyline Brands Kinky Brands (Proprietary) Rapidol Pty Godrej Global Mid East FZE PT. Megasari Makmur Issue Group Co.

Corporate Entities Godrej Industries Godrej Household Godrej Properties Godrej Agrovet

Joint Ventures Godrej Hershey Godrej Tyson Foods Godrej Efacec Auto. & Robotics

Holding Companies Godrej & Boyce Mfg. Co. Ltd Godrej InfoTech

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International Presence

Netherland s India Saudi Arabia UAE Singapore Oman Vietnam China

Malaysia

India Netherland Saudi Arabia UAE China Oman Malaysia Vietnam Singapore

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LAWKIM MOTORS GROUP

HISTORY:
Lawkim Limited, a privately held company incorporated in 1961 by Lawyer and Karim for manufacturing Electric motors, pioneered the manufacture of hermetic compressors in India in technical collaboration with Emerson Electric, USA. Lawkim was created to serve the growing market for motors in newly industrialising India. It went bankrupt in 1976 and was taken over by the Godrej family in early 1977. It was amalgamated into Godrej & Boyce Mfg Co Ltd in October 2008. Shindewadi Plant Commissioned in 1992. In 1993, Lawkim was among the first companies in the country to qualify for ISO 9001 certification and later re-certification in the updated ISO 9001:2001. It qualified for ISO 14001certification also in 2001 Lawkim motors group Amalgamation with Godrej and Boyce Mfg Co Ltd in 2008. Lawkim receives Commendation Certificate from CII for Business Excellence in 2010. In next 3 years Lawkim doubling the top line to Rs. 320 cr.

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Type of organization: Location:

Manufacturing industry. Gat No.431, Village Shindewadi, Post Shirwal, Dist Satara 412801. Telephone: 02169-244401-05 Fax: 02169-24440 Web: www.godrej.com

Name of Bank:

City Bank State Bank of India

Auditor:

kalyaniwalla & mistry

Method of Audit:

Half Yearly

Board of Director: Assets:

Vijay M. Crishna Freehold Land & building Machinery Furniture & fixture Vehicles

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MISSION: Enriching Quality of Life Everyday Everywhere. VISION:

Godrej in Every Home and Workplace

VALUES:
Integrity, Trust, To Serve, Respect, Environment

SLOGAN:
One Team One Dream

PRODUCT & SERVICES:

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ORGANISATION STRUCTURE OF LAWKIM:

Executive Director
Asst. Vice President & Head Shindewadi Works Executive Vice President & Business Head

Head Marketing

Head Design & Development

Head Account

Head Personnel

Head Purchase

Head Store

Head Manufacturing

Head Q.A.

Head IR & Admin

Mgmt. Rep.

Head Safety

Head Press shop

Head Annealing

Head Maintenance

Head compressor

Head Winding & Assembly

Head Machine Shop

Head Tooling

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LAWKIMS CLIENTS

Godrej Appliances Cummins Hitachi Emerson Climate Technologies Ltd MIDCO Markets

LG Voltas Tecumseh Products Pvt Ltd Domotech Ltd Dealers in the North and West

Danaher UCP

Blue Star Larsen & Toubro

ACHIEVEMENTS

o Excellent performance Award for category Sealing, Stamping & Fabrication in June 2011. o It qualified for ISO 14001certification. o Received Commendation Certificate for Strong Commitment to Excel in CII EXIM Bank Award 2009-10 by CII 2010.

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Theoretical Background

FINANCIAL ANALYSIS AND INTERPRETATION: INTRODUCTION:

Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by single set of statement & study of the trend of these factors as shown in the series of statement. There are three basic financial statements, these are 1. Balance Sheet 2. Profit & Loss Account 3. Cash Flow Statement

USERS OF FINANCIAL ANALYSIS:

Financial statements are analyzed by different groups or people. These users are,

A. Internal Users:
Internal users are those who are directly connected with company, such as Manager, Owner & Employees.

B. External Users:
External users are those who are outside the company but need the financial information such as, Bank, Government agencies, Investors etc.

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RATIO ANALYSIS:
MeaningRatio can be defined as numerical or an arithmetical relationship between two figures. It is expressed when figure is divided by others. Ratio analysis is important to reveal the financial position of the business firm. This helps banks, insurance companies as well as other financial institution in assessing a firm before sanctioning any loan to them. Financial analyst use financial ratios to compare the strength & weakness in various companies. There are many standard ratios which are used to evaluate the overall financial condition of corporation.

Importance of ratio analysis1. Helpful in financial analysis 2. Helpful in explaining financial health of the enterprise. 3. Helpful in future forecasting. 4. Helpful in comparing inter-firm performance. 5. Helpful in simplifying accounting figures. 6. Helpful in assessing operating efficiency of the business.

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ROLE OF RATIO ANALYSIS:It is true that the technique of Ratio Analysis is not a creative technique in the sense that it uses the same figures and information which is already appearing in the financial statements. At the same time, it is also true that what can be achieved by the technique of Ratio Analysis cannot be achieved by the mere preparation of financial statements. Ratio Analysis helps to appraise the firms in term of their profitably and efficiency of performance, either individually or in relation to those of other firms in the same industry Ratio Analysis is one of the best possible techniques available to the management to impart the basic functions like planning and control. As the future is closely related lo the immediate past, ratios calculated on the basis of historical financial statements may be of good assistance to predict the future, E.g., On the basis of inventory turnover ratio or debtors turnover ratio in the past, the level of inventory and debtors can easily be ascertained for any given amount of sales. AS the ratio analysis is concerned with all the aspects of a firm's financial analysis i.e., liquidity, solvency, activity, profitability and overall performance, it enables the interested persons to know the financial and operational characteristics of an organization and take the suitable decisions.

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CLASSIFICATION OF RATIOS:There are different parties interested in ratio analysis, for convenience purpose classify ratios as follows, 1. Liquidity ratio 2. Leverage ratio. 3. Activity ratio 4. Profitability ratio. 5. Turnover ratio.

RATIO ANALYSIS

Turnover Ratio

Leverage Ratio

Debtor Turnover Ratio W.C. Turnover Ratio Fixed Asset Turnover Ratio Current Asset Turnover Ratio
Profitability Ratio

Debt Equity Ratio Proprietor Ratio

Overall Profitability Ratio

Gross Profit Ratio Net Profit Ratio Operating Ratio

Return on Equity Return on Asset Return on Capital Employed

Liquidity Ratio

Liquid Ratio Current Ratio

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Turnover ratios:
These ratios are also known as Activity Ratio & Asset management ratio. These ratios are very important for a business concern to find out how well the facilities at disposal of the concern are being used. These ratios are usually calculated on the basis of sales or cost of good sold. High turnover ratio indicates better utilization of resources. The ratios compiled under this group indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of sales.

1) Stock Turnover RatioThe indication given by this ratio is the no of times the finished stock is turned over during given accounting period.

Cost of goods sold Stock Turnover RatioAverage Inventory Components: Average Inventory may be calculated as follows,

Opening Stock + Closing Stock Average Inventory= 2

Indications/Precautions: A high inventory turnover ratio indicates that maximum sales turnover is achieved with the minimum investment in inventory.

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2) Debtor Turnover RatioCredit policy followed by firm is indicated by this ratio. This ratio indicates the speed at which the sundry debtors are converted in the form of cash.

Credit Sales Debtor Turnover Ratio = Average Account Receivable

Components: Average Account Receivable - While considering total amount of debtor Bills Receivable should be considered.

3) Working Capital Turnover RatioThe indication given by this ratio is the no of times working capital is turned around in a particular period. Net Sales Working Capital Turnover Ratio = Net Working Capital

Components: Net sales - Sales after returns if any, both cash as well as credit. Working capital = current assets- current liabilities.

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Indications/precautions: A high working capital turnover ratio indicates the capability of the organization to achieve maximum sales with the minimum investment in working capital.

4) Fixed Asset Turnover Ratio:

This ratio is more important for manufacturing concern, as it indicate the utilisation of fixed assets. It is calculated as,

Net Sales Current Asset Turnover Ratio= -----------------------------Fixed Assets

Component: Net Sales- Sales after returns if any, both cash & credit. Fixed asset- Net fixed asset after depreciation. Indications: A high fixed assets turnover ratio indicates the capability of the organization to achieve maximum sales with the minimum investment fixed assets.

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PROFITABILITY RATIO:
Profit is the important part of every organization. These ratios give the idea about firms profitability. The intention for calculating these ratios is to know the profitability of the organisation.

1) Gross Profit RatioThis ratio is the difference between net sales & cost of good sold.

Gross Profit Gross Profit Ratio = Net Sales Components: Net Sales = Sales Sales Return. Gross Profit = Net Sales Cost of Manufacturing or Trading Concern.

Indications/Precautious: The Gross Profit ratio indicates the relation between production cost and sales and the efficiency with which the goods are produced or purchased.

2) Net Profit RatioThis ratio is used to determine the overall profitability due to various factors such as operational efficiency, trading on equity.

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Net Profit Net Profit Ratio = Net Sales

Indication/Precautions: The Net Profit Ratio indicates that portion of sales available to the owners after the consideration of all types of expenses and costs - either operating or non-operating or normal or abnormal.

3) Operating Ratio:
It is calculated as,

Cost of Good Sold Operating Expenses Operating Ratio= Net Sales Component: Operating Expenses = it includes Administrative Expenses, Selling Expenses etc. Indications/Precautions: This ratio indicates the percentage of net sales which is absorbed by the operating costs.

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LIQUIDITY RATIO:
These ratios are also known as financial ratio. These ratios are calculated to judge the financial position of the firm for long term as well as short term.

1) Current Ratio:
This ratio indicates how the expected current claims are covered by current assets.

Current Asset Current Ratio- = Current Liability Components: Current Assets - Cash in hand or at bank, marketable securities, sundry debtors, bills receivables, inventories, prepaid expenses and short term loans and advances Current liabilities - Sundry creditors, bills payable, outstanding expenses and bank overdraft or cash credit Indication/Precautions: Current ratio indicates the backing available to current liabilities in the form of current assets.

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2) Liquid/ Quick RatioThis ratio is better tool to measure the ability to honor day-to-day commitments.

Liquid current asset Liquid Ratio = Liquid liability

Liquid Assets - All current assets except inventories and prepaid expenses. Liquid Liabilities=current liabilities- bank overdraft or cash credit.

Indications: Liquid ratio indicates the backing available to liquid liabilities in the form of liquid assets.

OVERALL PROFITABILITY RATIO:

The ratio under this group indicates the relationship between the profits of a firm & investment in the firm.

1) Return on Assets:
The ratio measures the profitability of the investment in the firm. Net Profit Return on Assets = Asset Component: Net Profit It sometimes Net Profit after tax or Net Profit after tax & interest.

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Indications/Precautions: ROA measures the profitability of the Investments in a firm. Higher ROA will always be preferred.

2) Return on Equity:
This ratio measures firms efficiency at generating profit, & shows how well a company uses investment for growth.

Net Profit after Tax Preference Dividend Return on Equity = Equity

3) Return on Capital Employed:

It is calculated as, Net Profit + Interest on Long Term Sources Return on Capital Employed= Capital Employed

Component: Capital Employed = Share Capital + Reserve & Surplus + Long Term Liabilities Net Profit It sometimes Net Profit after tax or Net Profit after tax & interest.

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LEVERAGE RATIO:
These ratios provide indication of long term Solvency of the firm. The shareholders, debenture-holders and other lenders of long term finance/term loans may be basically interested in the ratios falling under this group.

1) Debt Equity Ratio:

This ratio is calculated as follows, Long Term Debt Debt Equity Ratio = Equity Shareholder Fund

Component: Shareholder Fund = Share Capital + Reserve & Surplus + Preference Shares. Long Term Debt = Long Term Loan, Debentures.

Indications/Precautions: Debt Equity ratio indicates the stake of shareholders or owners in the organization vis--vis that of the creditors.

2) Proprietor RatioThis ratio indicates the relationship between the Owners Fund & Total Assets. Total Assets Proprietor Ratio = Owners Fund

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Components: Owners Funds = Share Capital+ Reserve & Surplus+ Preference Shares.

Indications/Precautions: This ratio indicates the extent to which the owners funds are sunk in different kinds of assets.

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Section-IV

DATA COLLECTION & ANALYSIS

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Analysis of Data
Balance Sheet As On 31st March 2009

SOURCES OF FUNDS SHAREHOLDER'S FUNDS: Share Capital Reserve & Surplus

SCH.NO

31.03.2009

RS' 000

31-03-2008

A B

66,291 9,031,134 9,097,425

66,264 6,801,898 6,868,162

LOANS FUNDS Secured Loans Unsecured Loans

C D

4,370,726 1,733,653 6,104,379

3,853,165 2,562,315 6,415,480 550,081 15,787,385 13,833,723

DEFERRED TAX TOTAL FUNDS EMPLOYED APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less:- Depreciation Net Block Capital Work in Progress E

585,581

12,035,148 6,463,272 5,571,876 952,547 6,524,423

10,260,226 5,560,815 4,699,411 460,911 5,160,322 3,714,988

INVESTMENT CURRENT ASSETS & LOANS & ADVANCES Inventories Sundry Debtors Cash & Bank Balances Other current Assets SUB-TOTAL Less:- Current Provisions Current Liabilities Provisions NET CURRENT ASSETS Total Assets Liabilities & K L 12,121,279 896,358 G H I J 8,256,278 7,603,463 33,234 3,298,425

3,089,199

8,355,009 7,112,966 40,854 2,283,875 19,191,400 17,792,704

11,849,143 985,148 13,017,637 12,834,291 4,958,413 15,787,385 13,833,723

6,173,763

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Profit & Loss Account For year ended 31st march 2009
PARTICULARS no 31.03.2009 42,981,720 2,629,942 40,351,778 1,123,661 440,713 -2,982 31.03.2008 37,555,583 2,844,434 34,711,149 865,620 68,677 66,361 1,821 41,913,170 35,713,628 22,624,871 3,961,852 6,812 7,122,572 116,648 33,832,755

INCOME Gross Sales(Product & Services) Less: Excise Duty Net Sales(Product & Services) Other income from operation Compensation received on the surrender of tendency right Profit on sales on investments(net) Profit on sales, transfer/Disposal of fixed assets TOTAL RS. EXPENDITURE Raw materials consumed & goods purchased Employee Remuneration 7 Benefits Voluntary Retirement Compensation Other Expenses Property Development & construction Expenses Less: increase in Stocks of finished good & work in progress Less: Expenditure Transferred to Capital Account TOTAL EXPENDITURE Profit before interest & depreciation Interest Depreciation Profit Before Tax Provision for Current tax Provision for Deferred tax charges MAT Credit Entitlement Fringe Benefit Tax Provision for Prior Years Tax Adjustments Profit after Tax Balance bought forward from previous year DISPOSABLE PROFIT APPROPRIATIONS Proposed Dividends Tax on distributed profit (net) Transfer to general reserve Balance carried to balance sheet

N O P Q R

25,150,222 4,638,199 9,547 7,856,605 259,641 37,914,214

20,930 37,935,144 322,589 37,612,555 4,300,615 840,944 501,069 2,958,602 504,000 35,500 -41,100 40,019 5,802 2,414,381 3,448,203 5,862,584 397,746 27,828 244,000 5,193,010 5,862,584

-1,537,058 32,295,697 216,871 32,078,826 3,634,802 645,301 424,728 2,564,773 217,500 611,040 -54,600 41,201 32,329 1,717,303 2,371,056 4,088,359 397,586 67,570 175,000 3,448,203 4,088,359

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Balance Sheet as on 31 March 2010

SOURCES OF FUNDS SHAREHOLDER'S FUNDS: Share Capital Reserve & Surplus LOANS FUNDS Secured Loans Unsecured Loans DEFERRED TAX TOTAL FUNDS EMPLOYED APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less:- Depreciation Net Block Capital Work in Progress

SCH.NO

31.03.2010

Rs'000

31-03-2009

A B

66,291 11,935,435 11,801,726

66,291 9,031,134 9,097,425

C D

2,496,000 2,227,940 4723940 517,981 17,043,647

4,370,726 1,733,653 6,104,379 585,581 15,787,385

12,327,517 6,784,569 5,542,948 2,470,410 8,013,358

12,035,148 6,463,272 5,571,876 952,547 6,524,423 3,089,199

INVESTMENT CURRENT ASSETS & LOANS & ADVANCES Inventories Sundry Debtors Cash & Bank Balances Other current Assets SUB-TOTAL Less:- Current Provisions Current Liabilities Provisions NET CURRENT ASSETS Total Assets Liabilities &

4,575,577

G H I J

9,059,687 8,384,506 490,603 2,108,648 20,043,444

8,256,278 7,603,463 33,234 3,298,425 19,191,400

K L

14,344,517 1,244,215 15,588,732 4,454,712 17,043,647

12,121,279 896,358 13,017,637 6,173,763 15,787,385

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Profit & Loss Account for Year Ended 31st March 2010
PARTICULARS INCOME Gross Sales(Product & Services) Less: Excise Duty Net Sales(Product & Services) Other income from operation Compensation received on the surrender of tendency right Profit on sales on investments(net) Profit on sales, transfer/Disposal of fixed assets TOTAL RS. EXPENDITURE Raw materials consumed & goods purchased Employee Remuneration 7 Benefits Voluntary Retirement Compensation Other Expenses Property Development & construction Expenses Less: increase in Stocks of finished good & work in progress Less: Expenditure Transferred to Capital account TOTAL EXPENDITURE Profit before interest & depreciation Interest Depreciation Profit Before Tax Provision for Current tax Provision for Deferred tax charges MAT Credit Entitlement Fringe Benefit Tax Provision for Prior Years Tax Adjustments Profit after Tax Balance bought forward from previous year DISPOSABLE PROFIT APPROPRIATIONS Proposed Dividends Tax on distributed profit (net) Transfer to general reserve Balance carried to balance sheet
no 31.03.2010 45,521,250 1,899,460 31.03.2009 42,981,720 2,629,942 40,351,778 1,123,661 440,713 62,711 3,686 44,745,814 41,913,170 25,150,222 4,638,199 9,547 7,856,605 259,641 37,914,214 -2,982

43,621,790 1,057,627

N O P Q R

26,642,812 5,705,024 51,607 7,935,968 286,729 40,622,410

1,110,306 39,511,834 505,085 39,006,749 4,676,806 1,365,200 -67,600 16,667 3,362,539 5,193,010 8,555,549 596,619 61,618 340,000 7,557,312 8,555,549

20,930 37,935,144 322,589 37,612,555 4,300,615 840,944 501,069 2,958,602 504,000 35,500 -41,100 40,019 5,802 2,414,381 3,448,203 5,862,584 397,746 27,828 244,000 5,193,010 5,862,584

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Balance Sheet as on 31 March 2011

SOURCES OF FUNDS SHAREHOLDER'S FUNDS: Share Capital Reserve & Surplus LOANS FUNDS Secured Loans Unsecured Loans DEFERRED TAX TOTAL EMPLOYED FUNDS

SCH.NO

31.03.2011

Rs 000

31-03-2010

A B

66,291 14,776,334 14,842,625

66291 11,935,435 11,801,726

C D

7,642,081 2,219,982 9,862,063 432581

2,496,000 2,227,940 4,723,940 517,981

25,137,269

17,043,647

APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less:- Depreciation Net Block Capital Work in Progress

15,769,573 7,288,880 8,480,693 1,476,679 9,957,372

12,327,517 6,784,569 5,542,948 2,470,410 8,013,358 4,575,577

INVESTMENT CURRENT ASSETS LOANS & ADVANCES Inventories Sundry Debtors Cash & Bank Balances Other current Assets SUB-TOTAL Less:- Current Provisions Current Liabilities Provisions NET CURRENT ASSETS Total Assets Liabilities &

4,713,078

G H I J

12,258,944 12,894,622 60,040 3,437,888 28,651,494

9,059,687 8,384,506 ,,490,603 2,108,648 20,043,444

&
K L

16,819,268 1,365,407 18,184,675 10,466,819 25,137,269

14,344,517 1,244,215 15,588,732 4,454,712 17,043,647

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Profit & Loss Account for year ended 31st march 2011:
PARTICULARS INCOME Gross Sales(Product & Services) Less: Excise Duty Net Sales(Product & Services) Other income from operation Compensation received on the surrender of tendency right Profit on sales on investments(net) Profit on sales, transfer/Disposal of fixed assets(net) TOTAL RS. EXPENDITURE Raw materials consumed & goods purchased Employee Remuneration 7 Benefits Voluntary Retirement Compensation Other Expenses Property Development & construction Expenses Less: increase in Stocks of finished good & work in progress Less: Expenditure Transferred to Capital Accounts TOTAL EXPENDITURE Profit Before Tax Provision for Current tax Provision for Deferred tax charges Provision for Prior Years Tax Adjustments Profit after Tax Balance bought forward from previous year DISPOSABLE PROFIT APPROPRIATIONS Dividends Proposed Dividends Tax on distributed profit (net) Transfer to general reserve Balance carried to balance sheet
Sch no 31.3.2011 57,677,853 2,766,705 31.03.2010 45,521,250 1,899,460 43,621,790 1,057,627

54,911,148 1,271,833 10,000 4,758 11,136

62,711 3,686

56,208,875

44,745,814 26,642,812 5,705,024 51,607 7,935,968 286,729 40,622,410

N O P Q R

36,634,935 6,306,491 2,116 9,877,176 196,503 53,017,221

2,523,971 50,493,250 413,270 50,079,980 4,920,478 1,161,400 -85,400 -145,275 3,989,753 7,557,312 11,547,065

1,110,306 39,511,834 505,085 39,006,749 4,676,806 1,365,200 -67,600 16,667 3,362,539 5,193,010 8,555,549

795,492 80,099 473,263 10,198,211 11,547,065

596,619 61,618 340,000 7,557,312 8,555,549

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1. Current Ratio: Current Assets Current Ratio = ----------------------------------Current Liabilities

2007-08 Current Assets Current Liability Current Ratio 17,792,704 12,834,291 1.386: 1

2008-09 19,191,400 13,017,637 1.474:1

2009-10 20,043,444 15,588,732 1.285:1

2010-11 28,651,494 18,184,675 1.575: 1

Comments: Higher the current ratio better will be the situation. A current ratio of 2:1 is supposed to be standard and ideal. Current ratio of year 2010-11 is better than previous 3 years, but still it need to increase.

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2. Liquid Ratio: Liquid Current Asset Liquid Ratio = --------------------------------------Liquid Liability

2007-08 Liquid Asset Liquid Liability Liquid Ratio 9,437,695 12,834,291 0.735:1

2008-09 10,935,122 13,017,637 0.840:1

2009-10 10,983,757 15,588,732 0.704:1

2010-11 16,392,550 18,184,675 0.901:1

Comments: Higher the liquid ratio better will be situation. A liquid ratio of 1:1 is supposed to be standard and ideal. During 4 years liquid ratio is increases but it is not a standard, it should be increase in future.

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3. Debtor Turnover Ratio:

Credit Sales Debtor Turnover Ratio = ----------------------------------------------Average Account Receivable

2007-08 Credit Sales Debtors Debtor Turnover Ratio 34,711,149 7,112,966 4.879: 1

2008-09 40,351,778 7,603,463 5.307:1

2009-10 43,621,790 8,384,506 5.202:1

2010-11 54,911,148 12,894,622 4.258:1

Comments: Debtor Turnover Ratio is decreased in year 2010-11.

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4. Working Capital Turnover Ratio:

Net Sales Working Capital Turnover Ratio = ------------------------------------Net Working Capital

2007-08 Net Sales Working Capital Working Capital Turnover Ratio 34,711,149 4,958,413 7:1

2008-09 40,351,778 6,173,763 6.536:1

2009-10 43,621,790 4,454,712 9.792:1

2010-11 54,911,148 10,466,819 5.246:1

Comments: Higher this ratio better will be the situation. Working Capital Turnover Ratio is decreased in year 2010-11 than other year.

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5. Fixed Asset Turnover Ratio:

Net Sales Fixed Asset Turnover Ratio = --------------------------Fixed Assets

2007-08 Net Sales Fixed Asset Fixed Asset Turnover Ratio 34,711,149 5,160,322 6.726:1

2008-09 40,351,778 6,524,423 6.184:1

2009-10 43,621,790 8,013,358 5.443:1

2010-11 54,911,148 9,957,372 5.514:1

Comments: Fixed asset turnover ratio is decreased during last two years.

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6. Current Asset Turnover Ratio:

Net Sales Current Asset Turnover Ratio = -----------------------------Current Assets

2007-08 Net Sales Current Asset Current Asset Turnover Ratio 34,711,149 17,792,704 1.950:1

2008-09 40,351,778 19,191,400 2.102:1

2009-10 43,621,790 20,043,444 2.176:1

2010-11 54,911,148 28,651,494 1.916:1

Comments: Current Asset Turnover Ratio is get increased in 2008-09 & 2009-10, but it starts to decline in next year.

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7. Proprietor Ratio:

Total Assets Proprietor Ratio = -----------------------------Owners fund

2007-08 Total Asset Owner's Fund Proprietor Ratio 22,953,026 6,868,162 3.341:1

2008-09 25,715,823 9,097,425 2.826:1

2009-10 28,056,802 11,801,726 2.377:1

2010-11 38,608,866 14,842,625 2.601:1

Comments: Proprietor Ratio of year 2007-08 is higher than other 3 years.

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8. Debt Equity Ratio:

Long Term Debt Debt Equity Ratio = ----------------------------------------Equity Shareholder Fund

2007-08 Long Term Debt Shareholder Fund Debt Equity Ratio 3,853,165 6,868,162 0.561:1

2008-09 4,370,726 9,097,425 0.480:1

2009-10 2,496,000 11,801,726 0.211:1

2010-11 7,642,081 14,842,625 0.514:1

Comments: Ideally Debt Equity ratio should be 2:1. Debt Equity Ratio of the year 2009-10 is decreased but in next year it get increased.
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9. Gross Profit Ratio:

Gross Profit Gross Profit Ratio = ---------------------------- X100 Net Sales

2007-08 Gross Profit Net Sales Gross Profit Ratio 2,632,323 34,711,149 7.58%

2008-09 2,739,223 40,351,778 6.79%

2009-10 4,615,041 43,621,790 10.58%

2010-11 4,831,168 54,911,148 8.80%

Comments: Gross Profit Ratio of year 2009-10 is greater than other years but in next year it gets decline.

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10. Net Profit Ratio:

Net Profit Net Profit Ratio = ---------------------------- X100 Net Sales

2007-08 Net Profit Net Sales Net Profit Ratio 3,448,203 34,711,149 9.93%

2008-09 5,193,010 40,351,778 12.86%

2009-10 7,557,312 43,621,790 17.32%

2010-11 10,198,211 54,911,148 18.57%

Comments: Net profit ratio of company is increased consistently.

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11. Operating Profit Ratio:

Cost of good sold + operating expenses Operating Profit Ratio= ------------------------------------------------------- X 100 Net sales

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Summary Ratios

Table of Financial Ratios of Godrej Company for last 4 years

No 1 2 3 4 5 6 7 8 9 10 11 Current Ratio Liquid Ratio Debtor Turnover Ratio Working Capital Turnover Ratio Fixed Asset Turnover Ratio Current Asset Turnover Ratio Proprietor Ratio Debt Equity Ratio Gross Profit Ratio Net Profit Ratio Operating profit ratio

2007-08 1.386:1 0.735:1 4.879:1 7.000:1 6.726:1 1.95 3.341:1 0.561:1 7.58% 9.93%

2008-09 1.474:1 0.840:1 5.307:1 6.536:1 6.184:1 2.102 2.826:1 0.480:1 6.79% 12.86%

2009-10 1.285:1 0.704:1 5.202:1 9.792:1 5.443:1 2.176 2.377:1 0.211:1 10.58% 17.32%

2010-11 1.575:1 0.901:1 4.258:1 5.246:1 5.514:1 1.916 2.601:1 0.514:1 8.80% 18.57%

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FINDINGS

Company has facing problems regarding paying short term liabilities. Companys efficiency with which goods are produced & purchase is increased from 2009 to 2010. However one year later, in 2011 it starts decreasing. Company increases its profitability in last two years; it is good sign for company. Capital assets are financed by the way of owners fund rather than the creditors. Company gets decreasing its ratio of funds to be sunk with total assets, but in 2010-11 it starts to increase. The efficiency of company to use its assets had decreased from last two years. The year 2010-11 called peak year on business in during last 4 years.

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SUGGESTIONS

Company should reduce its liabilities to reduce problem regarding paying short term
liabilities.

Company should use the power of media to have the more customers; it is helpful in
increasing the sales with which turnover of company increase.

Company should increase its production & purchasing efficiency for which they need
to increase sales price or reduce production cost.

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BIBLIOGRAPHY

Books:
Author: Dr. N.M.Venchlekar Title: Financial Management

Author: Dr. Satish M. Inamdar Title: Principles of financial management

Internet Sites:
http://en.wikipedia.org/wiki/financial_statement

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