CHAPTER 3:

FINANCIAL REPORT

OF THE COMPANY

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3.1 Trading & Profit & Loss Account of Emu lines pvt. Ltd.

In Billions of FY2008 FY2009 Comparison Compariso

Rupee (Rs.) (Rs.) in Figures n in
(except for per (Rs.) Percentage
share items) (%)
income

Sales Turnover 4,344.39 4,676.21 (331.82) (7.63)

Excise Duty 51.37 24.17 (27.2) (52.94)
Net Sales 4,293.02 4,652.04 359.02 8.36
Other Income 551.13 -1,587.64 1036.51 65.28
Stock Adjustments 40.66 115.59 74.93 64.82
Total Income 4,884.81 3,179.99 1704.82 34.90
Expenditure
Raw Materials 1,861.17 2,049.30 188.13 9.18
Power & Fuel Cost 90.35 108.83 18.48 16.98
Employee Cost 420.04 472.65 52.61 11.13
Other 12.05 12.73
Manufacturing 82.60 94.65
Expenses
Selling and Admin 61.74 4.40
1,341.03 1,402.77
Expenses
Miscellaneous 259.36 67.67
123.90 383.26
Expenses
Preoperative Exp
0.00 0.00
Capitalized
Total Expenses 3,919.09 4,511.46 592.37 13.13
Operating Profit 414.59 256.17 158.42 38.21
PBDIT 965.72 -1,331.47 365.75 27.46
Interest 93.43 145.83 52.4 35.93
PBDT 872.29 -1,477.30 605.04 40.95
Depreciation 118.73 154.47 35.74 23.13
Other Written Off 0.00 0.00
Profit Before Tax 753.56 -1,631.77 878.21 53.81
Extra-ordinary 17.7 49.91
35.46 17.76
items
PBT (Post Extra- 824.99 51.11
789.02 -1,614.01
ord Items)
Tax 156.69 -574.24 414.55 72.19
Reported Net 427.08 40.87
617.72 -1,044.80
Profit
Total Value 404.23 16.41
2,057.93 2,462.16
Addition

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Preference
0.00 0.00
Dividend
Equity Dividend 317.15 0.00
Corporate
53.90 0.00
Dividend Tax
Per share data
(annualised)
Shares in issue 472.99 11.25
3,730.71 4,203.70
(lakhs)
Earning Per 8.26 33.23
16.56 -24.85
Share (Rs)
Equity Dividend
170.00 0.00
(%)
Book Value (Rs) 68.01 84.24 16.23 19.26

Interpretation:

1. The net sales generated from the profit and loss has been increased from Rs. 4,293.02

Million in year 2008 to Rs. 4,652.04 million in year 2009. so financial position of the

enterprise is become strong. net sales constituted 94% of global sales in 2007 reflecting

the Company’s focus on moving up the value curve.

2. The net profit generated from the balance sheet has been decreased from Rs. 617.72

million in year 2008 to Rs.- -1,044.80 million in year 2009. so financial position of

the enterprise is become weak.

3.2 Comparative Balance Sheet of Emu lines pvt.ltd.

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 Absolute Percentage
In Millions of Rupee 2009-10 Value for Change
2008-09
(except for per share (Rs.) Last Two for Last Two
(Rs.)
items) Year Year (%)
(Rs.)

4
Sources Of Funds
Total Share Capital 186.54 210.19 (23.65) (11.25)
Equity Share Capital 186.54 210.19 (23.65) (11.25)
Share Application Money 1.18 175.66 (174.48) (99.32)
Preference Share Capital 0.00 0.00
Reserves 2,350.68 3,330.92 (980.24 29.42)
Revaluation Reserves 0.00 0.00
Networth 2,538.40 3,716.77 (1178.37) (31.77)
Secured Loans 365.07 162.07 (203) (55.60)
Unsecured Loans 3,137.96 3,563.30 (426) (11.95)
Total Debt 3,503.03 3,725.37 (222.34) (5.96)
Total Liabilities 6,041.42 7,442.15 (1400.71) (18.82)
Application Of Funds
Gross Block 2,261.48 2,386.75 (125.27) (5.23)
Less: Accum. (180) (19.35)
791.96 930.07
Depreciation
Net Block 1,469.52 1,456.68 (12.84) (0.87)
Capital Work in Progress 327.42 428.77 (101.35) (23.55)
Investments 3,237.55 3,618.03 (101.35) (23.63)
Inventories 976.07 1,198.52 (222.45) (18.52)
Sundry Debtors 882.91 1,024.54 (142.37) (13.89)
Cash and Bank Balance 69.38 49.86 (20.48) (29.40)
Total Current Assets 1,928.36 2,272.92 (344.56) (15.15)
Loans and Advances 882.99 2,351.98 (1468.99) (62.45)
Fixed Deposits 111.07 1,885.08 (1774.01) (94.10)
Total CA, Loans & (3586.59) (55.10)
2,922.42 6,509.98
Advances
Deffered Credit 0.00 0.00
Current Liabilities 1,177.35 3,840.11 (2663.24) (69.34)
Provisions 738.14 731.20 (7.6) (1.02)
Total CL & Provisions 1,915.49 4,571.31 (2655.82) (58.09)
Net Current Assets 1,006.93 1,938.67 (931.74) (48.06)
Miscellaneous Expenses 0.00 0.00
Total Assets 6,041.42 7,442.15 (1400.73) (18.82)
Contingent Liabilities 201.00 252.85 (51.85) (20.17)
Book Value (Rs) 68.01 84.24 (16.23) (19.26)

Interpretation:

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1. The net worth generated from the balance sheet has been increased from Rs. 2,538.40

million in year 2008 to Rs. 3,716.77 million in year 2009. This shows the company has

obtained more net worth than previous year.

2. Debts generated from the balance sheet has been increased from Rs. 3,503.03

million in year 2008 to Rs. 3,725.37 million in year 2009. This shows the company

have more dependency on loans .

3. The Net current Assets has increased from 1,006.93 times in the year 2008 to 1,938.67

times in the year 2009. so financial position of the enterprise is become strong.

3.3 Cash flow statement of Emu lines pvt. Ltd.

In Billions of Rupee FY2008 FY2009 Compari Compariso

(except for per share items) (Rs.) (Rs.) son in n in

6
 Figures Percentage
(Rs.) (%)
CASH FLOW FROM OPERATING ACTIVITIES
Net profit/(loss)before tax,
(15000.31) 9985.35 5014.96 33.43
interest, share of profit
Depreciation, amortization &
2824.69 2183.41 641.28 22.70
impairment
Assets written off (11.83) 301.74 (289.91) 96.07
Deferred employees (12.14) 78.99
3.57 15.71
compensation
Unrealized exchange (gain)/loss
5705.11 (2465.70) 3239.41 56.78
net
Fair valuation loss on derivatives 7702.14
Dividend income (27.38) (1.02) (26.36) 96.27
Provision in the value of long
433.72
term investment
Profit on disposal of investment (42.83)
Unclaimed balance and excess 51.7 22.56
177.38 229.08
provision
Profit on sale of assets (933.20) (575.94) 357.26 38.28
Investment written off 93.42
Internal expenses 2055.01 1.411.88 643.13 31.29
Internal income (1053.26 (218.72) 843.54 79.23
Amounts written off 460.46 143.78 316.68 68.77
Provisions/for doubtful debts 124.79 66.78
(186.85) 62.06
and advances
16112.6 93.68
17198.33 1085.68
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Operating profit before
2198.02 11071.03 8873.01 80.14
working capital change
Adjustment for:
Inventories (3234.54) (293.08) 2941.46 90.93
Sundry debtors/receivable 1810.32 258.44 1551.88 85.72
Loans and advances 938.35 (867.54) 70.81 7.54
Trade/other payables (1285.25) 1144.86 170.39 13.25
Other current assets (615.72) 330.16 285.56 46.37
(2386.84) 372.84 2014 84.37
Cash generate from operating 11454.8
(188.82) 11643.66 98.37
activity 4
Direct taxes paid (1359.94) (1411.43) 51.49 3.64
Net cash generate from 8683.68 84.86
(1548.76) 10232.44
operating activity

CASH FLOW FROM

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INVESTING ACTIVITIES
Purchase of fixed assets (5748.80) (5227.26) 521.54 9.07
Sale of assets 1410.98 865.85 545.13 38.63
Purchase of investment (5212.01) (226.87) 4985.14 95.64
Sale proceed of investment 3055.72
Investment in associate (1391.53) (1812.33) 421 23.23
Investment in subsidiary
(21.32) (2332.23) 2310.91 99.08
company
Short term deposit/secured loans (3.74) 11.71 7.97 68.06
Interest received 913.51 211.91 701.6 76.80
Dividend received 29.38 1.02 28.36 96.52
Net cash used in investing 1440.46 17.13
(6967.81) 8408.27
activities
CASH FLOW FINANCING
ACTIVITY
Proceed from issue of share 34296.8 99.73
34389.19 92.34
capital
Proceed from equity share
1756.59
capital
Minority interest 112.64 236.11 123.47 52.29
Proceed from bank (4496.92) 4333.39 163.53 3.63
Issue expenses of share capital (201.40)
Interest paid (2055.01) (1411.88)
Dividend paid (2239.42) (3169.35) 930 29.34
Tax on dividend (380.59) (472.20)
Net cash from financing
26885.08 (391.59) 26493.4 98.5
activity
INCREASE INCASH AND
18368.51 1432.58 16933 92.18
CASH EQUIVALENTS
Cash and cash equivalents at
4295.80 2863.22 1432.58 33.34
the beginning
Cash and cash equivalents at 18368.5 81.04
22664.31 4295.80
the end

Interpretation:

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1. The cash generated from the operating activities has been decreased from Rs.10,232.44

million in year 2008 to Rs.1, 548.76 million in year 2009. This shows the company has

obtained more profit than previous year and company’s revenue has decreased due to

which very less amount of income is generated by the sales of products.

2. The cash generated from the investing activities has been decreased from Rs.8, 408.27

million in year 2008 to Rs.6, 967.81 million in year 2009. This shows the company

has not invested its income on those sources which will provide better returns and more

profit to the company.

3. The cash generated from the financing activities has been decreased from Rs.391.59

million in year 2008 to Rs.-26,885.08 million in year 2009. This shows the company

has not generated cash from financing activities.

Ratio analysis:

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Ratio analysis is a process of determining and interpreting relationship between the items

of financial statements to provide a meaningful understanding of the performance and

financial position of an enterprise.

(all the ratios are analyses by appendix A & appendix B)

PROFITABLITY RATIO:

Efficiency in business is measured by Profitability. Profit as compared to the capital

employed indicates profitability of the enterprise.

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Net profit ratio

It indicates overall efficiency of the business. Higher the net profit ratio better will be the

business.

Net Profit Ratio = Net Profit x 100

Net Sales

For Year 2008

= 617.72 x 100
4,293.02

= 14.38%

For Year 2009

= -1,044.80 x 100
4,652.04

= -22.45%

Interpretation:

Higher the ratio, the better it is for all concerned. From the above analysis we see that

percent of the Net Profit Ratio of the bank is decrease in the financial year of 2008 as

compare to 2009, so financial position of the enterprise is become weak.

Operating Profit Ratio

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This ratio is calculated to judge the operational efficiency of the business. A decline in

the operating profit ratio is better because it would have a high margin, which means

more profit.

Operating Profit Ratio = Operating Profit x 100

Net Sales

For Year 2008

= 414.59 x 100
4,293.02

= 9.65%

For Year 2009

= 256.17 x 100
4,652.04

= 5.50 %

Interpretation:

Higher the ratio, the better it is for all concerned. From the above analysis we see that

percent of the operating Profit Ratio of the bank is decrease in the financial year of 2008

as compare to 2009, so financial position of the enterprise is become weak.

Earning per Share

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This ratio helps in evaluating the prevailing market price of shares in the light of profit

Earning capacity. In other words, this ratio measures the earnings available to an equity

shareholder on per share basis.

Earning per Share = Net Profit after Tax – Pref. Dividend

No. of Equity Shares

For Year 2008

= 617.72- 0.00
186.54

= 3.31 per share

For Year 2009

= -1044.80-0.00
210.19

= -4.97per sharE

Interpretation:

The Earning Per Share of the company has decreased from 3.31 per share in 2008 -4.97

per share in 2009. so from the interpretation the efficiency of sources is decreases in

2007-08 from the financial year of 2006-07.

LIQUIDITY RATIOS:

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Liquidity Ratios measure the short-term solvency of a firm, i.e., the firm’s ability to pay

its current dues, loans, debts, etc.

Quick Ratio

This ratio is a fairly stringent measure of liquidity it is based on those current assets

which are highly liquid. Quick ratio of 1:1 is considered as ideal. Higher the quick ratio

the better the short term financial position.

= Total Current Assets – (Stock+Prepaid Expenses)

Current Liabilities

For Year 2008

= 952.29
6041.43

= 0.15%

For Year 2009

= 1074.4
7442.14

= 0.14%
Interpretation:

The Quick Ratio has decreases from 0.15 in the year 2008 014 in the year 2009 is shows

that the company has a bad short term financial position. From the above analysis we see

that quick ratio of the bank is decreased in the financial year of 2008 as compare

to 2009, so it interpret that the bank has in weak position to pay its liabilities.

Current Ratio

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This ratio shows short term financial soundness of the business. Higher ratio means

better capacity to meet its current obligation the ideal current ratio is 2:1. In case it is very

high it shows idealness of funds.

Current Ratio = Current Assets .

Current Liabilities

For Year 2008

= 1928.36
6041.43

= 0.31:1

For Year 2009

= 2,272.92
7,442.14

= 0.30:1

Interpretation:

The Current Ratio has decreased from 0.31:1 in year 2008 to 0.30:1 in year 2009. This

shows that the company does not have the enough capacity to meet its current

obligations. so it means that the financial position is becomes weak in the year of 2009.

Absolute Liquidity Ratio

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Liquidity ratio is a relationship of liquid assets with current liabilities and is computed to

assess the short-term liquidity of the enterprise in its correct form. Liquid assets put

against the current liabilities give the liquid ratio.

Absolute Liquidity Ratio = Cash + Bank Balance + Marketable Securities

Current Liabilities – Bank Over Draft

For Year 2008

= 69.38 x 100
6041.43.

= 1.14:1

For Year 2009

= 49.86 x 100
7,442.14

= 0.66:1

Interpretation:

The Absolute Liquidity Ratio has deceased from 1.14:1 in the year 2008 to 0.66:1 in the

year 2009. This shows that short term financial position of the company is not well and

the liquid assets have not been properly maintained by the company.

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Interest Coverage Ratio

Interest Coverage Ratio = EBDIT

Interest

For Year 2008

= 965.72
93.43

= 10.33:1

For Year 2009

= -1,331.47
145.83

= -9.1:1

Interpretation:

The Interest Coverage Ratio has decreased from 10.33 in the year 2008 to -9.1 in

the year 2009.so it means that the financial position is becomes weak in the year of 2009.

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TURNOVER RATIOS:

These ratio measures how well the facilities at the disposal of the concern are being

utilized. These ratio are known as turnover ratio as they indicate the rapidity with which

the resources available to the concern are being used to produce sales. These ratios are

generally calculated on the basis of sales or cost of sales.

Net Assets Turnover Ratio

The ratio establishes a relationship between net sales and current assets. It indicates how

efficiently current assets have been used in achieving the sales. As an indicator of

efficient or inefficient use the ratio should be compared with the previous period or

industry standard.

Net Assets Turnover Ratio = Net Sales .

Net Total Assets- Fixed Assets

For Year 2008

= 4293.02
-921.43

= 4.65:1

For Year 2009

= 4,652.04
-334.25

= 13.91:1
Interpretation:

The Net Assets Turnover Ratio has increased from 4.65 times in the year 2008 to 13.91

times in the year 2009. so financial position of the enterprise is become strong.

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Debtors Turnover Ratio

This ratio economy and efficiency in the collection of amount due from debtors. Higher

the ratio, better it is since it indicates that debts are being collected more quickly.

Debtor Turnover Ratio = Total Sales .

Accounts Receivable

For Year 2008

= 4293.02
882.91

= 4.86:1

For Year 2009

= 4,652.04
1,024.54

= 4.54:1

Interpretation:

The Debtor Turnover Ratio has decreased from 4.86 times in the year 2008 to 4.54 times

in the year 2009. This shows that financial position of the company is not well and the

debtors have not been properly maintained by the company. so it means that the short-

term financial position is becomes weak in the year of 2009.

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SOLVENCY RATIOS:

The term solvency implies the ability of an enterprise to meet its long term independent,

and thus, solvency ratios convey enterprises ability in long term obligations.

Total Asset to Debt Ratio

This ratio measures the safety margin available to the suppliers of long term debts. It

measures the extent to which debt is covered by assets.

Total Asset to Debt Ratio = Total Asset .

Long Term Debts

For Year 2008

= 6041.42
3503.03

= 1.72:1

For Year 2009

= 7,442.15
3,725.37

= 1.99:1
Interpretation:

A Total Assets to Debt Ratio of 2:1 is considered satisfactory. From the above analysis

we see that current ratio of the bank is increase in the financial year of 2008 as compare

to 2009, so it means that the long-term financial position is becomes strong in the year of

2009.

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Debt equity ratio

Debt-Equity Ratio is computed to ascertain soundness of the long-term financial position

of the firm. This ratio expresses a relationship between debt (external equities) and the

equity (internal equity). Debt means long-term loans, i.e., debenture, loans (long-term)

from the financial institutions. Equity means shareholders’ funds, i.e., preference share

capital, equity share capital, reserves less losses and fictitious assets like preliminary

expenses.

Debt-Equity Ratio = Debt (Long Term)______

Equity (Shareholders’ Funds)

For Year 2008

= 3503.03
186.54

= 18.77:1

For Year 2009

= 3725.37
210.19

= 17.72:1

Interpretation:

A Debt-Equity Ratio of is not considered satisfactory. From the above analysis we see

that debt equity ratio of the bank is decreased in the financial year of 2009 as compare to

2008, so financial position of the enterprise is become weak.

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References/Bibliography

I collect the data from various sources like:

 News Paper

 Annual Reports

 Internet

 Journals

 Magazines

Links are:

http://www.moneycontrol.com/financials/emu lines laboratories/balance-sheet/RL

http://www.emulines.com/aboutus/mission.aspx

http://www.emulines.com/aboutus/aboutus.aspx

http://www.emulines.com/operations/operationregion.aspx?id=59&flag=

http://www.emu lines .com/businessopportunities/business.aspx

http://www.emu lines .com/common/contactus.aspx#c1

www.emu lines .com/investorinformation/investor_contact.aspx

www.equitymaster.com/result.asp?symbol=RANB

www.moneycontrol.com/india/stockpricequote/.../ emu lines .../

http://ibnlive.in.com/news/management-rejig-at-emu lines -new-ceo/93317-7.html

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ric=

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