A DISSERTATION REPORT ON FINANCIAL ANALYSIS AT BHARAT HEAVY ELECTRICALS LIMITED HARDWAR SUBMITTED TO

in partial fulfillment of the requirement for the two years full time Post Graduate Degree In MASTER OF BUSINESS ADMINISTRATION (FINANCE)

SUPERVISED BY : DR.SUREKHA RANA

SUBMITTED BY : MEENAKSHI SATI MBA (BUSINESS FINANCE)

DEPARTMENT OF MANAGEMENT STUDIES KANYA GURUKUL MAHAVIDYALAYA, DEHRADUN 2ND CAMPUS, GURUKUL KANGRI UNIVERSITY HARIDWAR-249401 2009-2011

DECLARATION I hereby declare that the study enti tled FINANCIAL ANALYSIS in the context of H.E.E.P. BHEL being submitted by me is a record of my own work. The study was conducted at Finance Department, H.E.E.P. BHEL. The matter embodied in this project report has not been submitted to any other University or Institution for the award of degree.

MEENAKSHI SATI MBA (BUSINESS FINANCE)

ACKNOWLEDGEMENT

It gives me immense pleasure to acknowledge and thank all those who have given consistent guidance, advice and encouragement in my endeavor. I would also like to thank all those persons who have spent their valuable time to contribute the required information to me and gave me support while preparing this report.

I expressed my sincere thanks to my sincere thanks HOD Dr Surekha Rana Dr Bindu Arora ,Dr Patiraj Kumari, Ms P. Panuli, Dr Nirupama Pokhriyal, MsVijayshree for administrative help. I am very thankful to all faculty member of my collage.

I owe my sincere thanks to Mr. SHELENDER KUMAR Additional General Manager-HRD, BHEL, HARIDWAR for providing me an opportunity to undertake my project work in their esteemed organization and to obtain valuable insights about the working of the firm.

I am greatly indebted to, MR. S.K ARYA BHEL HARIDWAR for his kind guidance and helpful suggestions.

With Sincere Thanks MEENAKSHI SATI MBA (BUSINESS FINANCE)

Contents
1. Company profile 2. Introduction a. Financial analysis b. Financial ratio c. Comparative balance sheet d. Trend analysis e. Cash flow f. Fund flow 3. Research methodology 4. Analysis & interpretation 5. Conclusion 6. Suggestion Bibliography Annexure

COMPANY PROFILE

BHARAT HEAVY ELECTRICAL LIMITED- A CORPORATE GIANT BHEL was established about 50 years ago to become the most important symbol of Heavy Electrical Equipment industry in India. It ranks amongst the first few of its kind in the world. It is the largest heavy engineering and manufacturing enterprise of its kind in India with well- recognized track record of performance, making profits continuously since 1971-72. The company achieved a turnover of Rs.21608 crores and gross margin of Rs.4395 crores in 2007-08. BHEL caters to core sector of Indian economy viz. Power Generation and Transmission, Heavy Industry, Transportation, Telecommunication, Renewable Energy, Defence, etc. The wide network of BHELs - 14 manufacturing divisions, 4 Power sector regional centers, 8 Service Centers, 16 Regional Offices and over 160 project sites in India and abroad. Total manpower of about 42200 employees enable the company to remain closer to its customers to provide them with good quality products, fabricated/manufactured system and services at competitive prices. BHEL has

established its footprints in more than 70 countries. Having attained ISO 9001-14001 certifications, BHEL is now on its journey towards TQM. The companys inherent potential coupled with its strong performance over the years has resulted in its being chosen as one of the Navratna PSUs which enjoy the support from the government in their endeavors to become global player with its prudent financial management. BHEL occupies an all-

important niche as evident by its ranking by CII amongst top nine PSUs based on financial performance. Recently, in a survey conducted by Business India, BHEL has been rated as Seventh Best Employer in India.

BHELs VISION BHELs vision is to become a world-class engineering enterprise committed to enhancing stakeholder value and the company is striving to achieve this visualization. BHELs MISSION To be an Indian Multinational Engineering Enterprise providing Total Business Solutions through Quality Products, Systems and Services in the fields of Energy, Industry, Transportation, Infrastructure and other potential areas BHELs VALUES Zeal to excel and zest for change Integrity and fairness in all matters Respect for dignity and potential of individuals Strict adherence to commitments Ensure speed of response Foster learning, creativity and team-work Loyalty and pride in the company

BUSINESS POLICY In line with companys vision, mission and values, the company dedicates itself to sustained growth with increasing positive economic value addition and customer focused business leadership in the power and industry sectors.

COMPANY'S OBJECTIVE

GROWTH: To ensure a steady growth by enhancing the competitive edge of BHEL in existing business, new areas and International operations so as fulfill national expectations from BHEL. PROFITABILTY: To provide a reasonable and adequate return on capital employed, primarily through improvements in operational efficiency, capacity utilization and productivity, and generate adequate internal resources to finance the company's growth.

CUSTOMER FOCUS: To build a high degree of customer confidence by increasing value for his money through international standards of product quality, performance and superior services.

PEOPLE-ORIENTATION: To enable each employ to achieve his potential, improve his capabilities, perceive his role and responsibilities participate and contribute positively to the growth and success of the company. To invest in human resources continuously and be alive to their needs.

IMAGES: To fulfill the expectations, which stakeholders like Govt. as owner, employees, customers, ant the country at large have from BHEL.

TECHNOLOGY: Achieve technological excellence in operations by development of indigenous technologies and efficient absorption and adaptation of imported technologies to suit business needs and priorities, and provide the competitive advantage to the company.

BHEL IN INDIA
REGIONAL OFFICES (POWER SECTOR): -

1. NEW DELHI (NORTHERN REGION) 2. CALCUTTA (EASTHREN REGION) 3. NAGPUR (WESTHREN REGION) 4. MADRAS (SOUTHREN REGION)

BUSINESS OFFICES: 1. BANGLORE 2. BHUBANESHWAR 3. BOMBAY 4. CHANDIGARH 5. GUWAHATI 6. JABALPUR 7. JAIPUR 8. LUCKNOW 9. MADRAS

10. NEW DELHI 11. PATNA 12. RANCHI 13. SECKUNDRABAD

MANUFACTURING UNITS: 1. BANGALORE 2. BHOPAL 3. HARDWAR 4. HYDRABAD 5. JHANSI 6. RANIPET 7. RUDRAPUR 8. TIRUCHIRAPALLI SERVICE CENTRES:1. BANGALORE 2. BARODA 3. CALCUTTA 4. CHANDIGARH 5. SECUNDRABAD 6. NEW DELHI 7. NAGPUR 8. PATNA

14. NEW DELHI 15. PATNA 16. RANCHI 17. SECKUNDRABAD

MANUFACTURING UNITS: 9. BANGALORE 10. BHOPAL 11. HARDWAR 12. HYDRABAD 13. JHANSI 14. RANIPET 15. RUDRAPUR 16. TIRUCHIRAPALLI SERVICE CENTRES:1. BANGALORE 2. BARODA 3. CALCUTTA 4. CHANDIGARH 5. SECUNDRABAD 6. NEW DELHI 7. NAGPUR 8. PATNA

BHEL HARDWAR

At Hardwar the picturesque background of Shivalik hills, 2 important manufacturing units of BHEL are located. The hum of the construction machinery woke up the Shivalik hills during early 60s and sowed the seeds of one of the greatest symbol of Indo -Soviet collaboration-Heavy Electrical Equipment Plant (HEEP) of BHEL, located on the northern side. The plant went into production in 1967 and is engaged in the manufacture of power generation and utilization equipment. Located immediately to the south of HEEP is the Central Foundry Forge Plant (CFFP), set up with French collaboration for the production of alloy steel castings and forgings required to complete the production profile of BHEL. HEAVY ELECTRICAL EQUIPMENT PLANT - PROFILE The Heavy Electrical Equipment Plant (HEEP) of BHEL Hardwar was set up in technical collaboration with USSR, for the manufacture of power plant equipment; AC/DC motors of various sizes associated control equipment and started production in Jan. 1967. In 1976, BHEL entered into a collaboration agreement with M/s Kraftwork Union AG Germany for design, manufacture, erection and commissioning of large size Steam Turbines and Turbo Generators. In 1989, BHEL Hardwar also signed collaboration with Siemens, Germany for transfer of technology for manufacture of large gas turbine. More than 40 % of the countrys electrical energy is generated from the power equipment supplied by BHEL Hardwar.

CENTRAL FOUNDRY FORGE PLANT The Central Foundry Forge Plant was set up at Hardwar with French collaboration. The construction started in 1974 and production was commenced in 1976.This plant has inbuilt high degree of sophistication normally associated with much larger plants and has successfully developed various intricate castings and forgings which were imported earlier.CFFP has successfully manufactured various types of steels, e.g., creep resistant steels, heat resistant steels, stainless steels, armor steels etc. per Indian and International standards. CFFP has been supplying sophisticated castings used in power sector e.g., steam turbine castings, turbo generator press rings, hydro turbine Kaplan blades and Francis runners, compressor castings etc. The castings have also been manufactured for Defense, Nuclear, Chemical and steel sectors. Critical Forgings manufactured by CFFP include: HP, IP and LP rotors and discs etc., From steam turbines, shafts, pole and plates, rotor bush, thrust collars etc., for hydro sets and jackets and discharge cover for pumps besides various types of critical forgings for defense, nuclear, steel, cement and machine building industries. CFFP is further upgrading and augmenting its facilities in the high growth and high technical areas. Most of the castings and forgings produced by CFFP are of import substitution nature. CFFP has also exported motor frame and steam turbine castings and forgings to CIS and Germany. CFFP has also won the National award for import substitution. It has been recognized as a well known steel maker-Foundry and Forge Master by Indian Boiler Board. The American Bureau of Shipping has also approved CFFP for the manufacture of castings and forgings for ship building industry.

MAJOR COMPETITORS OF BHEL

1. ELECTRO CONSULT 2. ABB 3. BEEHTEL 4. BLOCK & NEATCH 5. GENERAL ELECTRIC 6. RAYTHEON 7. WESTINGHOUSE 8. CNMI & EC 9. SANGHAI ELECTRIC CO 10. GEC-ALSTHOM 11. ELECTRIM 12. FRANCO TOSI 13. FUJI 14. HITECHI 15. MITSUBISHI 16. TOSHIBA 17. ROLLS ROYCE 18. SIEMENS

ITALY SWITZERLAND USA USA USA USA USA CHINA UK UK POLAND FRANCE JAPAN JAPAN JAPAN JAPAN GERMANY GERMANY

PRODUCT COLLABORATION
Thermal sets, Hydro sets, Motors and Control gear Bypass and Pressure reducing system Prommash export Russia Sulzer Brother Ltd. Switzerland Siemens AG Germany General Electric Canada Baloke Duerr AG

Electronic automation system/Turbine and generator Francis type Hydro Turbine

Moisture Separator Germany Condensers Programmable Controls Heat Boilers

ABB, Sweden GE, USA Heny Vogt Machine Co. USA

CUSTOMERS

Karnath Gumti Bhandardara-1 Subbal Sindh Kali nadi Stage-1 Chibro Ukai Chennai

Govt. of J & K Govt. of Tripura Govt. of Maharashtra Govt. of J & K Karnataka power corporation Ltd. UP Electricity Board Gujrat Electricity Board Govt. of J & K

Tillari Kadamparai EXPORTS

Govt. of Maharashtra Tamilnadu Electricity Board

Devighat Bhumibol

Govt. of Nepal Electricity Generating Authority, Thailand

Pattani

Electricity Generating Authority, Thailand

Kulikhani

Govt. of Nepal

KEY COMPETITORS: Power Sector Giant of the World viz. Siemens Germany, ABB, General electric of USA etc. are the major competitors of HEEP. All these are the MNCs and enjoy huge financial and R&D backup.

KEY CUSTOMERS AND SUPPLIERS HEEPs customer profile ranges from State Electricity Boards, Government Power utilities like NTPC, NPC, NHPC to IPPs like Reliance Energy. HEEP has also supplied Gas Turbine sets to overseas customers in Libya & Iraq. Power Sector Regions of BHEL are its key internal customers. In view of expected market scenario, BHEL has strategically decided that HEEP will concentrate on coal based Higher Rating Thermal Sets for domestic market to fulfill the countrys vision of adding 107,000 MW capacity to

achieve Power on Demand by 2012. Our key customer, NTPC has drawn up plan for capacity addition of 20,000MW by 2012. HEEP has planned for execution of 34,619MW by 2012. MAJOR CHALLENGES:

The favorable business scenario has given the unit a major challenge of establishing Power Infrastructure of the country in close co-ordination with its key customers. HEEP has committed itself to meet the countrys requirements. To cater to the needs of h igher rating sets of 800MW, HEEP has collaboration with Siemens.

STRATEGIC CHALLENGES

Key Business Cycle time reduction State of the art technology Cost reduction Operational Timely delivery Material cost reduction Productivity improvement Effective utilization of machines Human Resource Motivation of employees

SWOT ANALYSIS
STRENGTH (S): Low cost producer of quality equipment due to cheap labour and fully depreciated plants. Flexible manufacturing set up. Entry barrier due to high replacement cost of its manufacturing facilities. Comprehensive turnkey experience from product design to commissioning.

WEAKNESSES (W): High working capital requirement due to its exposure to cash starved SEBs (State electricity boards) and High WIP. Inability to provide project financing.

OPPORTUNITIES (O): High-expected growth in power sectors (7000 MW/p.a. needs to be added). High growth forecast in Indias index of industrial production would increase demand for industrial equipment such as motors and compressors.

THREATS (T): Technical suppliers are becoming competitors with the opening up of the Indian economy. Fall in global power equipment prices can effect profitability.

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

The term research methodology indicates an exhausted investigation into some accepted principles and conclusion so as to bring into some new and novel facts. Research is the process of systematic and in-depth study or search any particular subject , topic or area of investigation , backed by collection , completion , presentation and interpretation of relevant details/ data / information . It is carefully search or inquiry for finding the fact which would helpful of application or utilization . The first step towards any research is to identify the problem and to look at it objectively . For research study choose the project of FINANCIAL ANALSIS in BHEL There are mainly two of data . Primary data Secondary data

Primary data can be collected either through experiment or through survey . If the researcher conducts an experiment , observes some quantitative measurements, or the data , But in the case of a survey data can be collected by ; observation , personal interviews , telephonic interviews , mailing of questionnaires , etc . Secondary data, that data which are available in the printed form . Data Collection : For the study purpose preferred secondary data which includes; balance sheet , profits &loss a/c , annual reports & the internal documents . Financial tools: Ratio analysis Comparative balance sheet.

OBJECTIVES OF STUDY

A. To determined the relationship of items and group of items and in the financial statement. To analysis short term solvency of the company. To analysis long term solvency of the company. To analysis profitability of the company. To analysis turnover ratio of the company. To study the financial position through comparative balance sheet. To analysis efficiency of cash usage of the company.

B. To analysis increase or decrease in rupee amount of assets and liabilities as well as in percentage

INTRODUCTION

INTRODUCTION

Financial analysis is assessment of effectiveness with which funds (investment and debts) are employed in a firm. Efficiency and profitability of its operations, values and safety of debtors claims against the firms assets. It employees techniques such as fund flow analysis and financial ratios to understand the problems and opportunity inherent in a investment or financing decision.

OBJECTIVES OF FINANCIAL ANALYSIS

Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations. 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 3. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.

METHODS OF FINANCIAL ANALYSIS Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.): Past Performance - Across historical time periods for the same firm (the last 5 years for example), Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects. Comparative Performance - Comparison between similar firms. These ratios are calculated by dividing a (group of) account balance(s), taken from the balance sheet and / or the income statement, by another, for example : n / equity = return on equity Net income / total assets = return on assets

Stock price / earnings per share = P/E-ratio

Comparing financial ratios are merely one way of conducting financial analysis. Financial ratios face several theoretical challenges:They say little about the firm's prospects in an absolute sense. Their insights about relative performance require a reference point from other time periods or similar firms. One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least two ways. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance. Seasonal factors may prevent year-end values from being representative. A ratio's values may be

distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values. They fail to account for exogenous factors like investor behavior that are not based upon economic fundamentals of the firm or the general economy .

TOOLS OF FINANCIAL ANALYSIS The commonly used tools of financial analysis are given below. Financial Ratio Simple comparative statements Common size statements Trend analysis Cash flow statement Fund flow statement Financial Ratios

Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratio analysis can predict future bankruptcy. Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used:

FINANCIAL RATIOS

Liquidity ratios

Asset turnover ratios

Financial leverage ratios

Profitability ratios

Dividend policy ratios

1) Liquidity Ratios Liquidity ratios provide information about a firm's ability to meet its short-term financial obligations. They are of particular interest to those extending short-term credit to the firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio) and the quick ratio. Current ratio:- The current ratio is the ratio of current assets to current liabilities: Current ratio an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business's current assets generally consist of cash, marketable securities, accounts receivable, and inventories. Current liabilities include accounts payable, current maturities of long-term debt, accrued income taxes, and other accrued expenses that are due within one year. In general, businesses prefer to have at least one dollar of current assets for every dollar of current liabilities. However, the normal current ratio fluctuates from industry to industry. A current ratio significantly higher than the industry average could indicate the existence of redundant assets. Conversely, a current ratio significantly lowers than the industry average could indicate a lack of liquidity.

Quick ratio:- A measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent test of liquidity. Cash Ratio: Indicates a conservative view of liquidity such as when a company has pledged its receivables and its inventory, or the analyst suspects severe liquidity problems with inventory and receivables. 2) Turnover Ratios:Turnover ratio indicates the speed with which assets are being converted or turned over into sales. These ratios are also known as activity ratio. Activity ratios are employed to evaluate the efficiency with which the firm manage and utilizes assets. Activity ratio involves a relationship between sales and assets. A proper balance between sales and assets generally reflect that assets are managed well. Activity ratios can be analysis the Inventory turnover:Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products. This ratio can be calculated by dividing cost of good sold by average inventory. The average inventory is the average of opening and closing balance of inventory. A low ratio is pointer towards stock piling of difficult to say items whereas high ratio indicates of fast selling items.

Debtors turnover ratio:Debtors turnover ratio shows the relationship between credit sales and average debtors. Average debtors. The average Debtor is the average of opening and closing balance of debtor. This ratio determines the velocity of debtors i.e. number of time on an average debtor turnover in an year. It is calculated by dividing credit sales by average debtors. Higher the ratio it is, it shows the speedy collection of receivables. Average collection period:Average collection period measures the quality of debtors since it indicate the speed of there collection. The shorter average collection period, the better the quality of debtors. Since a short collection period implies the promote payments by debtors. Working capital turnover ratio:Working capital turnover ratio indicates the relationship between sales and net current assets. It may thus compute net working capital turnover by dividing sales by net working capital. Fixed assets turnover ratio:Fixed assets turnover ratio indicates relationship between sales and net fixed assets. With the help of this ratio firm can be calculated its efficiency to utilizing fixed assets. It may thus compute fixed assets turnover by dividing sales by fixed assets. Total Asset Turnover:-

Measures the activity of the assets and the ability of the business to generate sales through the use of the assets. Assets turnover ratio indicates relationship between sales and net fixed assets 3) Financial Leverage Ratios Financial leverage ratios provide an indication of the long-term solvency of the firm. Unlike liquidity ratios that are concerned with short-term assets and liabilities, financial leverage ratios measure the extent to which the firm is using long term debt. Debt ratio: - The debt ratio is defined as total debt divided by total assets:Debt ratios depend on the classification of long-term leases and on the classification of some items as long-term debt or equity. A debt equity ratio of 2:1 is the norm accepted by financial institutions for financing projects. Capital Employed To Net Worth Ratio: This ratio shows relationship between debt and equity. It can be calculated dividing by capital employed by net worth. PROPRIETOR RATIO: It is assumed that larger the proportion of the shareholders equity, the stronger is the financial position of the firm. This ratio will supplement the debt-equity ratio. In this ratio a relationship established between the shareholders fund and the total assets. A reduction in shareholders equity signally the over dependence on outside source for long term financial needs and this carries the risk of higher level of gearing. This ratio

indicates the degree to which unsecured creditors are protected against loss in the event of liquidation. FIXED ASSETS TO NET WORTH RATIO
This ratio shows that how efficiently the fixed assets are utilized by the company. This also shows that what portion of net worth is invested in the fixed assets.

3) Profitability Ratios Profitability ratios offer several different measures of the success of the firm at generating profits. Gross profit Ratio:Indicates the relationship between net sales revenue and the cost of goods sold. This ratio should be compared with industry data as it may indicate insufficient volume and excessive purchasing or labor costs. The gross profit margin is a measure of the gross profit earned on sales. The gross profit margin considers the firm's cost of goods sold, but does not include other costs. Net profit ratio:- net profit ratio helps to determine the overall profitability due to various factors such as operational efficiency, trading on equity etc. Return on assets:- Return on assets is a measure of how effectively the firm's assets are being used to generate profits. It is defined as: Return on equity:- Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each dollar invested in the firm's stock. Return on equity is defined as follows:

FINANCIAL STATEMENT

Financial statements are organized summaries of detailed information about the financial position and performance of a corporate entity. Financial statements provide an overview of a business's financial condition in both short and long term. All the relevant financial information of a business enterprise, presented in a structured manner and in a form easy to understand, are called the financial statements. There are four basic financial statements. For uniformity, a common format for each of these statements is followed:

1. Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and net equity as of a given point in time. 2. Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. It is called Income Summary in the U. S. and Canada. Profit & Loss account provides information on the operations of the enterprise. These include sale and the various expenses incurred during the processing state. 3. Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period. 4. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

COMPARATIVE FINANCIAL STATEMENTS

Comparison of financial statements may be used to express any one of the following types of comparison:

1. Comparison with standard figures

:- comparison of actual with standard or

budgeted figures for the same period and the same firm.

2. Intra-firm comparison

:- comparison of actual figures of one period with those

of another period for the same firm .

3. Inter-firm comparison

:- comparison of actual figures of one firm with those of

another standard fir belonging to the same industry.

4. Pattern comparison

:- comparison of actual figures of one firm with those of

industry to which the firm belongs.

5. MEANING OF COMPARATIVE FINANCIAL STATEMENTS Comparative financial statements may refer to(a). financial statements of an enterprise for two or more successive accounting years.

(b) financial statements of different enterprises for the same accounting periods. (c). financial statements of an enterprise and an industry to which the enterprise belongs, for the some accounting period.

(d). financial statements based on relationship among the components of financial statements for two or more successive accounting periods.

COMPARATIVE BALANCE SHEET Comparative balance sheet is the balance sheet which is prepared in such a manner so as to reflect the financing and investing activities of the business for two or more accounting periods. These statements facilitates the horizontal analysis since each accounting variable is analyzed horizontally. in such statements, the figures are shown as follows. a). in absolute monetary value b). increase or decrease in absolute values c). by way of percentage

OBJECTIVES OF COMPARATIVE BALANCE SHEET

To analyze information of assets and liabilities in absolute rupees, i.e., balances on two or more comparatives dates.

To analyze increase or decrease in rupees amounts as well as in percentage by taking the data of previous years as base.

To measure the financial position of the enterprise, To review the past financing and investing activities and their effect on the financial position of the enterprise.

TREND ANALYSIS Trend analysis is a time series analysis to determine the trend of the financial data over a series of years. The working of the trend analysis involves the following three steps: Step 1. Selection of a base year Step 2. Assignment of an index number of 100 to each itemsof base year. Step 3. Calculation of percentage relationship that each item of each year bears to the same items in the base year.

The term "trend analysis" refers to the concept of collecting information and attempting to spot a pattern, or trend, in the information. In some fields of study, the term "trend analysis" has more formally-defined meanings In project management trend analysis is a mathematical technique that uses historical results to predict future outcome. This is achieved by tracking variances in cost and schedule performance. In this context, it is a project management quality control tool. Although trend analysis is often used to predict future events, it could be used to estimate uncertain events in the past, such as how many ancient kings probably ruled between two dates, based on data such as the average years which other known kings reigned. A trend shown by the percentage of the item may not provide clue to favorable or unfavorable tendencies unless such trend is compared with the trend of the item which can be logically connected with the trend of the item which can be logically connected with the former item , for example , a downward trend for sales accompanied by an upward trend for inventories, bills receivables, sundry debtors , bad debts would essentially reflect a fall in operating efficiency.

CASH FLOW STATEMENT

In financial accounting, a cash flow statement or statement of cash flows is a financial statement that shows how changes in balance sheet and income accounts affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements.

People and groups interested in cash flow statements include

Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses

Potential lenders or creditors, who want a clear picture of a company's ability to repay

Potential investors, who need to judge whether the company is financially sound Potential employees or contractors, who need to know whether the company will be able to afford compensation .

OBJECTIVE:-

The cash flow statement was previously known as the statement of changes in financial position or flow of funds statement. The cash flow statement reflects a firm's liquidity or solvency. The balance sheet is a snapshot of a firm's financial resources and obligations at a single point in time, and the income statement summarizes a firm's finial

transactions over an interval of time. These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues. The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These noncash transactions include depreciation or write-offs on bad debts to name a few. The cash flow statement is a cash basis report on three types of financial activities: operating activities, investing activities, and financing activities. Noncash activities are usually reported in footnotes.

The cash flow statement is intended to:-

1. provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances 2. provide additional information for evaluating changes in assets, liabilities and equity . 3. improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods 4. indicate the amount, timing and probability of future cash flows

The cash flow statement has been adopted as a standard financial statement because it eliminates allocations, which might be derived from different accounting methods, such as various timeframes for depreciating fixed assets.

Cash flow activities The cash flow statement is partitioned into three segments, namely: cash flow resulting from operating activities, cash flow resulting from investing activities, and cash flow resulting from financing activities.The money coming into the business is called cash inflow, and money going out from the business is called cash outflow. Operating activities

Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include:

Receipts from the sale of goods or services Receipts for the sale of loans, debt or equity instruments in a trading portfolio Interest received on loans Dividends received on equity securities Payments to suppliers for goods and services Payments to employees or on behalf of employees Tax payments Interest payments (alternatively, this can be reported under financing activities in IAS 7, but not in US GAAP)

Payments for the sale of loans, debt or equity instruments in a trading portfolio Items which are added back to [or subtracted from, as appropriate] the net income figure (which is found on the Income Statement) to arrive at cash flows from operations generally include:

Depreciation (loss of tangible asset value over time) Deferred tax Amortization (loss of intangible asset value over time) Any gains or losses associated with the sale of a non-current asset, because associated cash flows do not belong in the operating section.(unrealized gains/losses are also added back from the income statement)

Investing activities Examples of Investing activities are

Purchase of an asset (assets can be land, building, equipment marketable securities, etc.)

Loans made to suppliers or customers

Financing activities

Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the company generates income. Other activities which impact the long-term liabilities and equity of the company are also listed in the financing activities section of the cash flow statement.

Under IAS 7, financing cash flows include:

Proceeds from issuing shares Proceeds from issuing short-term or long-term debt Payments of dividends Payments for repurchase of company shares Repayment of debt principal, including capital leases For non-profit organizations, receipts of donor-restricted cash that is limited to long-term purposes

Items under the financing activities section include:

Dividends paid Sale or repurchase of the company's stock Net borrowings

Disclosure of noncash activities Under IAS 7, noncash investing and financing activities are disclosed in footnotes to the financial statements. Under US GAAP, noncash activities may be disclosed in a footnote or within the cash flow statement itself. Noncash financing activities may include:

leasing to purchase an asset converting debt to equity exchanging noncash assets or liabilities for other noncash assets or liabilities

issuing shares in exchange for assets'

Preparation methods

The direct method of preparing a cash flow statement results in a more easily understood report. The indirect method is almost universally used, because FAS 95 requires a supplementary report similar to the indirect method if a company chooses to use the direct method.

Direct method

The direct method for creating a cash flow statement reports major classes of gross cash receipts and payments. Under IAS 7, dividends received may be reported under operating activities or under investing activities. If taxes paid are directly linked to operating activities, they are reported under operating activities; if the taxes are directly linked to investing activities or financing activities, they are reported under investing or financing activities.

Indirect method

The indirect method uses net-income as a starting point, makes adjustments for all transactions for non-cash items, then adjusts for all cash-based transactions. An increase in an asset account is subtracted from net income, and an increase in a liability account is added back to net income. This method converts accrual-basis net income (or loss) into cash flow by using a series of additions and deductions.

Rules

The following rules are used to make adjustments for changes in current assets and

liabilities, operating items not providing or using cash and nonoperating items.

Decrease in noncash current assets are added to net income Increase in noncash current asset are subtracted from net income Increase in current liabilities are added to net income

Decrease in current liabilities are subtracted from net income Expenses with no cash outflows are added back to net income Revenues with no cash inflows are subtracted from net income (depreciation expense is the only operating item that has no effect on cash flows in the period)

Non-operating losses are added back to net income Non-operating gains are subtracted from net income FUND FLOW STATEMENT

In every concern, the funds flow in form different sources and similarly funds are invested in various sources of investment. It is continuous process. The study and control of this funds-flow process (i.e., the uses and sources of funds) is the main objective of financial management to assess the soundness and the solvency of the enterprise. The funds-flow-statement is a report on financial operations changes, flow or movements during the period. It is a statement which shows the sources an application of funds or it shows how the activities of a business is financed in a particulate period. In

other words, such a statement shows how the financial resources have been used during a particular period of time. It is, thus, a historical statement showing sources and application of funds between the two dates designed especially to analyse the changes in the financial conditions of an enterprise. In the words of Foulke,itis-

A statement of Sources and Application of Funds is a technical device designed to analyse the changes in the financial condition of a business enterprises between two dates. Funds Flow Statement is not an income statement . Income statement shows the items of income and expenditure of a particular period, but the Funds flow statement is an operating statement as it summaries the financial activities for a period of time. It covers all movements that involve an actual exchange of assets.

Various titles are used for this statement such as 'Statement of sources and Application of Funds', 'Summary of Financial operations,' 'Changes in Financial Position', 'Fund received and Disbursed', 'Funds Generated and Expended', Changes in Working Capital, Statement of Fund' etc. Title of Funds Flow Statement has been modified from time to time. Really it is very difficult to find a short time for such statement which carries much to the readers regarding its contents an functions. A new interpretation of the term 'funds, has now been adopted as to include assets or financial resourceful which do not flow through the working capital accounts. It seems to be the most suitable meaning fort the term 'funds' but the most commonly used interpretation of the term 'funds' is 'working capital. OBJECTIVE OF FUND FLOW STATEMENT Funds Flow Statement is an analytical tool in the hands of financial manager. The

basic purpose of this statement is to indicate on historical basis the changes in the working capital i.e., where funds came from and were there are used during a given period. The utility of this statement can be measured on the basis of its contributions to the financial management. It generally serves the following purposes:-

(1) Analysis of Financial Position. The basic purpose of preparing the statement is to have a rich into the financial operations of the concern. It analyses how the funds were obtained and used in the past. In this sense, it is a valuable tool for the finance manager for analyzing the past and future plans of the firm and their impact on the liquidity. He can deduce the reasons for the imbalances in uses of funds in the past an take necessary corrective actions. In analyzing the financial position of the firm, the Funds. (2) Evaluation of the firm financing. One important use of statement is that it evaluates the firm financing capacity. The analysis of sources of funds reveals how the firms financed its development projects in the past i.e. from internal sources or from external sources , it also reveals the rate of growth of the firm . (3) An instrument for allocation of resources . In modern large scale business, available funds are always short for expansion programmes and there is always a problem of allocation of resources. It is , therefore, a need of evolving an order of priorities for putting through their expansion programmes which are phased accordingly, and funds have to be arranged as different phases of programs get in to their stride. The amount of funds to be available to these projects shall be estimated by the finance with the help of funds flow statement. This prevents the business from becoming a helpless victim of unplanned action.

(4) A tool of communication to outside the world. Fund flow statement help in gathering the financial states of business. it gives an insight in to the evaluation of the present financial position and gives answer to the problem where have or resources been moving it provides a useful information to bankers, creditors, financials it provides a useful information and government etc.regarding amount of loan required its purpose the term of the payment and source for the payment of the loans etc. the financial manager gains confidence born out of a study of fund flow statement in fact it carries information regarding firms financial policy to outside world .

(5) Future guide. Analysis of fund flow statement several years reveal certain valuable information for a financial manager for planning the future financial requirements of the firm and their nature to i.e. short term, long term or mid term . the management can formulate its financial policy based on information gather from the analysis of such statement . Financial manager can rearrange firm financing more effectively on the basis of such information along with the expected change in trade payables and various accruals.

ANALYSIS & INTERPERTATION

ANALYSIS & INTERPERTATION

Analysis and Interpretation has been done on the basic of secondary data i.e. balance sheet (2005-06, 2006-07,2007-08,2008-09,2009-2010) for the fulfill of objective. A. To determined the relationship of items and group of item in the financial statement. To analysis short term solvency of the company. To analysis turnover ratio of the company. To analysis long term solvency of the company. To analysis profitability of the company. To analysis efficiency of cash usage of the company.

B .To analysis increase or decrease in rupee amount of assets and liabilities as well as in percentage

A) To determined the relationship of items and group of item in the financial statement. To analysis short term solvency of the company
Current Ratio TABLE: 1
[Amount in Rs. Crore]

Year Current assets Current liabilities Current ratio

2006 16330 10320 1.58

2007 21062 14420 1.46

2008 27906 20022 1.39

2009 36901 28322 1.30

2010 42934 32442 1.32

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006 2007 2008 2009 2010 current ratio

Inference: Table indicates that current ratio values are 1.58, 1.46, 1.39, 1.30, and 1.32 for years 2006, 2007, 2008, 2009, 2010 respectively. Current ratio is highest in year 2006 i.e. 1.58 and lowest in 2009 i.e. 1.30.

Quick ratio TABLE: 2 Year Quick assets Current liabilities Quick ratio 2006 11387 10320 1.10 2007 15702 14420 1.08 2008 20781 20022 1.03 2009 [Amount in Rs. Crore] 2010 30886 32442 0.95

26640 28332 0.94

1.15

1.1

1.05

Quick ratio

0.95

0.9

0.85 2006 2007 2008 2009 2010

Inference: Table shows that quick ratio varies values are1.10, 1.08, 1.03, 0.94 and 0.95 for year 2006 ,2007,2008 ,2009 and 2010 respectively. Quick ratio is highest in year 2006 i.e. 1.10 and lowest in 2009 i.e.0.94.

Absolute liquid ratio TABLE: 3

[Amount in Rs. Crore]

Year Cash & bank Current liabilities Absolute liquid ratio

2006 4134 10230 0.40

2007 5808 14420 0.40

2008 8386 20022 0.42

2009 10314 28332 0.36

2010 9790 32442 0.30

0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2006 2007 2008 2009 2010 Absolute liuuid ratio

Inference: This table shows absolute liquid ratio values are 0.40, 0.40, 0.42, 0.36 and 0.30 for year 2006 ,2007,2008, 2009, 2010 respectively. Absolute liquid ratio is highest in year 2008 i.e. 0.42 and lowest in year 2010 i.e. 0.30.

To analysis turnover ratio of the company.

Debtors turnover ratio TABLE: 4

[Amount in Rs. Crore]

Year Turnover Average debtors Debtors turnover ratio

2006 13374 7168 1.86

2007 17238 8432 2.04

2008 19305 10835 1.78

2009 26212 13975 1.87

2010 32861 18332 1.79

2.1 2.05 2 1.95 1.9 1.85 1.8 1.75 1.7 1.65 2006 2007 2008 2009 2010 Debtors tournover ratio

Inference: This table indicates that debtors turnovers ratio value are i.e. 1.86, 2.04, 1.78, 1.87 and 1.79 for year 2006 ,2007,2008 ,2009 and 2010 respectively. Debtors turnover ratio is highest in year 2007 i.e. 2.04 and lowest in year 2008 i.e. 1.78.

Average collection period TABLE :5

[Amount in Rs. Crore]

Year No of working days Debtors turnovers ratio Average collection period

2006 360 1.86 193

2007 360 2.04 176

2008 360 1.78 202

2009 360 1.87 192

2010 360 1.79 201

205 200 195 190 185 180 175 170 165 160 2006 2007 2008 2009 2010 Average collection period

Inference: This table shows that average collection period values are 193,176, 202,192 and 201for year 2006 ,2007,2008 ,2009,and 2010. Average collection period is highest in year 2008 i.e. 202 and lowest in year 2007 i.e. 176.

Stock turnover ratio TABLE: 6

[Amount in Rs. Crore]

Year COGS Average inventory Stock turnover ratio

2006 10751 3744 2.87

2007 13459 3981 3.38

2008 14840 4977 2.98

2009 21332 6787 3.14

2010 26236 8537 3.07

3.5 3.4 3.3 3.2 3.1 3 2.9 2.8 2.7 2.6 2006 2007 2008 2009 2010 Stock tournover ratio

Inference: This table shows that stock turnover ratio values are 2.87, 3.38, 2.98, 3.14 and 3.07 for year 2006 , 2007, 2008, 2009, 2010 respectively. Stock turnover ratio is highest in year 2007 i.e. 3.38 and lowest in year 2006 i.e. 2.87. High turnover ratio is an indicator of expansion of business which is in year 2007.

Inventory holding period TABLE :7

[Amount in Rs. Crore]

Year No of working days Stock turnover ratio Inventory period

2006 360 2.87

2007 360 3.38 106

2008 360 2.98 120

2009 360 3.14 114

2010 360 3.07 117

holding 125

130 125 120 115 110 105 100 95 2006 2007 2008 2009 2010 Inventory holding period

Inference: This table shows that inventory holding period values are 125,106,120,114,117 for year 2006, 2007 , 2008 , 2009 and 2010 respectively. Inventory holding period is highest in year 2006 i.e. 125 and lowest in year 2007 i.e.106.

Fixed assets to proprietary ratio TABLE :8

[Amount in Rs. Crore]

Year Fixed assets Proprietary fund

2006 982 7301

2007 989 8788 0.11

2008 981 10774 0.09

2009 1471 12938 0.11

2010 2415 15917 0.15

Fixed assets to 0.13 proprietary ratio

0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2006 2007 2008 2009 2010 Fixed assets to proprietary ratio

Inference: Table shows the fixed assets ratio values are 0.13, 0.11, 0.09, 0.11 and 0.15 for year 2006, 2007, 2008, 2009 and 2010 respectively. The ratio is highest in 2010 i.e.0.15 and lowest in 2008 i.e. 0 .09 less fixed assets to proprietary ratio indicates the good position of company.

Fixed assets ratio to long term debt TABLE :9

[Amount in Rs. Crore]

Year Fixed assets

2006
982

2007
989

2008
981

2009
1471

2010
2415

Long-term 558 debt Fixed assets 1.75 ratio to long term debt

89 11.12

95 10.3

149 9.8

128 18.8

20 18 16 14 12 10 8 6 4 2 0 2006 2007 2008 2009 2010 Fixed assets ratio to long term debt

Inference:
Table shows the fixed assets ratio to long term debt values are 1.75, 11.12,10. 3, 9.8,18.8 for year 2006 ,2007,2008 ,2009 ,2010 respectively. Fixed assets ratio is highest in year 2010 i.e. 18.8 and lowest in 2006 i.e.1.75.

 To analysis long term solvency of the company.

Debt equity ratio TABL E: 10
[Amount in Rs. Crore]

Year

2006

2007 14509 8788 1.6

2008 20117 10774 1.8

2009 28481 12938 2.2

2010 32568 15917 2.0

External 10878 equities Internal 7301 equity Debt equity 1.4 ratio
2.5

1.5 Debt equity ratio 1

0.5

0 2006 2007 2008 2009 2010

Inference:
This table implies Debt equity ratios value are 1.4, 1.6, 1.8, 2.2 and 2.0 for year 2006 , 2007 ,2008 ,2009 and 2010.Debt equity ratio is highest in year 2009 i.e.2.2 and lowest in 2006 i.e. 1.4. The ideal norms of Debt equity ratio are 2:1.

Proprietary ratio TABLE: 11

[Amount in Rs. Crore]

Year Proprietary fund Total assets Proprietary ratio

2006 7301 7859 0.92

2007 8788 8877 0.98

2008 10774 10869 0.99

2009 12938 13088 0.98

2010 15917 16045 0.99

0.98

0.96

0.94

Proprietary ratio

0.92

0.9

0.88 2006 2007 2008 2009 2010

Inference:
Table implies that Proprietary ratio in year 2006, 2007, 2008, 2009 and 2010 values are 0.92, 0.98, 0.99, 0.98 and 0.99.respectively. Proprietary ratio is highest in year 2008 and 2010 i.e. 0.99 and lowest in year 2006 i.e. 0.92. .

To analysis profitability of the company.

Gross profit ratio TABLE :12

[Amount in Rs. Crore]

Year Gross profit Net sales

2006 2623 13374

2007 3779 17238 21.1

2008 4465 19305 23.12

2009 4880 26212 18.6

2010 6625 32861 20.16

Gross profit 19.6 ratio

25

20

15 Gross Profit Ratio 10

0 2006 2007 2008 2009 2010

Inference:
Table shows that gross profit ratio values are 19.6, 21.1, 20.3,18.6 , 20.16 for year 2006, 2007 , 2008, 2009 , 2010 respectively. Gross profit ratio is highest in year 2008 i.e. 23.12 and lowest in 2009 i.e. 18.6.. A high Gross profit ratio is sign of good management.

Net profit ratio TABLE :13

[Amount in Rs. Crore]

Year Net profit Net sales Net ratio

2006 1679 13374

2007 2415 17238 14

2008 2859 19305 14.8

2009 3118 26212 11.9

2010 4311 32861 13.1

profit 12.55

16 14 12 10 8 6 4 2 0 2006 2007 2008 2009 2010 Net Profit Ratio

Inference: Table indicates that net profit ratio values are 12.55, 14, 14.8, 11.9 and 13 .1 for year 2006,2007,2008,2009,2010respectivily. Net profit ratio is highest in 2008 i.e. 14.8 and lowest in year 2009 i.e. 11.9

Operating ratio TABLE: 14 Year Operating profit Net sales Operating ratio 2006 11033 13374 82 2007 13630 17238 79 2008 15618 19305 80 2009 22612 26212 86
[Amount in Rs. Crore]

2010 25305 32861 77

88 86 84 82 80 78 76 74 72 2006 2007 2008 2009 2010 Operating ratio

Inference:
Table shows that operating profit ratio values are 82,79,80,86 and 77 for year 2006, 2007, 2008, 2009, 2010 respectively. In year 2009 operating ratio is highest I.e.86 and 2010 it is lowest i.e. 77. Highest ratio is sign of proper usage of working capital or efficiency of company.

Return to net worth TABLE :15

[Amount in Rs. Crore]

Year Net profit Net worth

2006 1679 7301

2007 2415 8788 27.4

2008 2859 10774 26.5

2009 3118 12938 24.2

2010 4311 15917 30.8

Return to 22.9 net worth

35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 Return to net worth

Inference:
Table indicates that return to net worth values in year2006, 2007,2008,2009,2010 as 22.9, 27.4, 26.5, 24.2, 30.8 respectively .Return to net worth is highest in year 2010i.e. 30.8 and lowest in year 2006 i.e. 22.9.

To analysis efficiency of cash usage of the company.

Total capital turnover ratio TABLE: 16

[Amount in Rs. Crore]

Year Net sales Total capital employed Total ratio capital

2006 13374 7001

2007 17238 7640 2.25

2008 19305 8873 2.17

2009 26212 10091 2.59

2010 32861 12988 2.53

turnover 1.91

2.5

1.5

Total capital turnover ratio

0.5

0 2006 2007 2008 2009 2010

Inference:
This ratio shows that relationship between sales and capital employed. High ratio is sign of good position of company. In this table ratio values are 1.91, 2.25, 2.17, 2.59 and 2.53 for 2006,2007,2008,2009 and 2007respectively. Ratio is highest in year 2009 i.e. 2.59 and lowest in year 2006 i.e. 1.91

Cash in current assets TABLE: 17

[Amount in Rs. Crore]

Year Cash & bank Current assets

2006 4134 16330

2007 5808 21062 28

2008 8386 27906 30

2009 10314 36901 71

2010 9790 42934 77

Cash in current 25 assets

90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 Cash in current assets

Inference:
This table shows values of cash in current assets in the year 2006, 2007, 2008, 2009 and 2010 i.e. 25, 28, 30, 30,71,77 respectively. Highest ratio in year 2010 i.e. 77 and lowest in year 2006 .The higher ratio show efficiency of cash uses is command.

Turnover of cash in sale TABLE: 18

[Amount in Rs. Crore]

Year Net sales Cash & bank

2006 13374 4134

2007 17238 5808 2.96

2008 19305 8386 2.30

2009 26212 10314 2.54

2010 32861 9790 3.35

Turnover of cash 3.23 in sale

4 3.5 3 2.5 2 1.5 1 0.5 0 2006 2007 2008 2009 2010 Turnover of cash in sale

Inference: This table shows that turnover of cash in sale ratio values are 3.23, 2.96, 2.30, 2.54, 3.35 for year 2006, 2007,2008,2009 and 2010 respectively. This ratio highest in year 2010 i.e. 3.35 and lowest in year 2008 i.e. 2.3.

B. To analysis increase or decrease in rupee amount of assets and liabilities as well as in percentage
Fixed assets TABLE: 19 Year Fixed assets
2006 982 2007 989 -8 -0.80 2008 981 +490 49.9 2009 1471 +944 64.1 [Amount in Rs. Crore] 2010 2415 -

Increase/Decrease +7
0.71 Percentage increase/Decrease

70 60 50 40 30 20 10 0 2006 -10 2007 2008 2009 Percentage Increase/Decrease

Inference:
This table is showing that is fixed asset is increasing from the year 2008 to 2009 which shows that company investing in fixed asset show blockage in cash investment.

Investment TABLE :20

[Amount in Rs. Crore]

Year Investment

2006 8

2007 8 0 0

2008 8 44 550

2009 52 28 53

2010 80 -

Increase/Decrease 0 Percentage 0 increase/Decrease

600

500

400

300

Percentage increase/Decrease

200

100

0 2006 2007 2008 2009

Inference:
This table shows that investment is constant in year 2006 and 2007(i.e. 0,0) where as changes raised in investment in year 2008 and 2009 ( i.e. 550,53)

Current assets TABLE :21

[Amount in Rs. Crore]

Year Current assets

2006 16331

2007 20980 6926 33

2008 27906 8995 32.2

2009 36901 6034 16

2010 42935 -

Increase/Decrease 469 Percentage 28 increase/Decrease

35 30 25 20 15 10 5 0 2006 2007 2008 2009 Percentage increase/Decrease

Inference:
This table shows that current assets is increase in year 2006, 2007 and 2008(i.e.28,33 and32.2) but investment decrease in year 2009 (i.e.16).

Current liabilities TABLE :22

[Amount in Rs. Crore]

Year Current liabilities

2006 10320

2007 14337 5685 39

2008 20022 8311 41.5

2009 28333 4109 14.5

2010 32442 -

Increase/Decrease 4017 Percentage 38 increase/Decrease

45 40 35 30 25 20 15 10 5 0 2006 2007 2008 2009 Percentage increase/Decrease

Inference:
This table shows that current liabilities is constantly increase in year 2006, 2007, 2008 (i.e. 38, 39 , 41.5and 14.5) where as decrease in year 2009 (i.e14.5).

Reserves and surplus TABLE: 23

[Amount in Rs. Crore]

Year Reserves surplus

2006 and 7057

2007 8543

2008 10284

2009 12449

2010 15428

Increase/Decrease 1486 Percentage 21 increase/Decrease

1741 20

2165 21.05

2979 23.9

25 24 23 22 21 20 19 18 2006 2007 2008 2009 Percentage increase/Decrease

Inference
This table shows that reserves and surplus is constantly increase in years 2006, 2007, 2008 , 2009 and 2010 i.e. 21, 20, 21.05 and 23.9 respectively.

Share capital TABLE :24

[Amount in Rs. Crore]

Year Share capital

2006 244

2007 244 245 100.04

2008 489 -

2009 489 -

2010 489 -

Increase/Decrease Percentage increase/Decrease

120

100

80

60

Percentage increase/deacease

40

20

0 2006 2007 2008 2009

Inference:
This table shows that share capital in year 2006 and 2007(i.e. 0,0) where as changes raised in investment in year 2008 but decreasing in 2009 ( i.e. 550,53) respectively.

Findings

After data analysis, the findings can be drawn as: Current ratio value in year 2010 is 1.32. Current ratio value highest 1.58 in year 2006 and lowest 1.30 in 2009. Quick ratio is highest in year 2006 i.e. 1.10 and lowest in year 2009 I.e. 0.94. Absolute liquid ratio is highest 0.42 in the year 2006 and lowest 3.30 in the year 2010. Debtors turnover ratio highest value in year 2007 i.e. 2.04 and lowest in year 2008 i.e. 1.78 Average collection period is highest in year 2008 i.e. 202 and lowest in 2007 i.e. 1.76. Stock turnover ratio highest value in year 2007 i.e. 3.38 and lowest in year 2006 i.e 2.87 and inventory holding period is highest value in year 2006 i.e. 1.26 and lowest in year 2007 i.e. 106 Debt equity ratio value highest in year 2009 i.e. 2.2 and lowest year 2006 i.e. 1.4 Proprietary ratio is highest in year 2008 and lowest in year 2006. Gross profit ratio highest in year 2008 i.e. 23.12 and lowest value in year 2009 i.e. 18.6 Net profit ratio in year 2008 i.e. 14.8 and lowest in year 2009 i.e. 11.9 Cash in current asset higher value in year 2010 i.e. 77 and lowest in year 2006 i.e. 25 Fixed asset to long term ratio , highest value is 18.8 in year 2010 and lowest value 1.75 in year 2006 Return to net worth highest 2010 i.e. 30.8 and lowest in year 2006 i.e. 22.9 Total capital turnover ratio, highest value in 2009 i.e. 2.59 and lowest value in year 2006 i.e. 1.91

Conclusion
After data analysis and finding the conclusion is drawn as: The current ratio of the company is 1.32. The current ratio is 1.5, 1.46, 1.39 and 1.3 respectively. The quick ratio is 0.95. The Q.R for the four previous year areThis ratio shows company liquidity position is not so well. Debtor turnover ratio of the company is 1.79 in current year and previous year 1.86, 2.04, 1.78 and 1.87 respectively. Debtors turnover ratio highest 2007 but not in current year. Inventory turnover ratio increases in year 2006, 2007 then decreases in 2008 and again increase in 2009 and decrease in year 2010. High turnover indicate of expansion which is only year 2007. Debt equity ratio is good for company point of view. Turnover of the company is 32861 in year 2010 which is more than previous year 2009 i.e. 26212 Gross profit is constantly increase year after year. gross profit is increasing in year 2006, 07,08, 09 and 2010 i.e. 2623, 3779, 4465, 4480 and 6625 respectively Net profit after tax is constantly increased.

Suggestion

Company should focus on current ratio and quick ratio. Average collection period is fluctuating and debtors turnover ratio is slightly decline for there is need for improvement on average collection period and debtors turnover. There should be proper arrangement of debt funds. Cash in current assets is find out in increasing position so the company is pay attention on that.