CHAPTER-1

1
 CHAPTER-1

INTRODUCTION

Sandhu Automobiles Private Limited is a Private

incorporated on 23 July 1996. It is classified as Non-
govt company and is registered at Registrar of
Companies, Chandigarh. Its authorized share capital
is Rs. 10,000,000 and its paid up capital is Rs.
5,570,000. It is inolved in Manufacture of motor
vehicles

Sandhu Automobiles Private Limited's Annual

General Meeting (AGM) was last held on 29
September 2018 and as per records from Ministry of
Corporate Affairs (MCA), its balance sheet was last
filed on 31 March 2018.

Directors of Sandhu Automobiles Private Limited are

Ajay Pal Sandhu, Karam Pal Sandhu, Sukhbirinder
Kaur, .

Sandhu Automobiles Private Limited's Corporate

Identification Number is (CIN)
U34102PB1996PTC018543 and its registration
number is 18543.Its Email address is
account4@sandhuauto.com and its registered
address is LINK ROADDHOLEWAL CHOWK
LUDHIANA PUNJAB PB 141003 IN , - , .

2
Company Details

CIN U34102PB1996PTC018543

Company Name SANDHU AUTOMOBILES PRIVATE

LIMITED

Company Status Active

RoC RoC-Chandigarh

Registration 18543
Number

Company Company limited by Shares

Category

Company Sub Non-govt company

Category

Class of Private
Company

Date of 23 July 1996

Incorporation

3
CIN U34102PB1996PTC018543

Age of Company 23 years, 0 month, 25 days

Activity Manufacture of motor vehicles

4
Director Details

DIN Director Name Designation

01083650 AJAY PAL SANDHU Managing Directo

01096125 KARAM PAL SANDHU Wholetime Direct

01096180 SUKHBIRINDER KAUR Director

CHAPTER-2

5
6
2.1 INTRODUCTION OF FINANCIAL ANALYSIS

Financial analysis involves the process of identifying, measuring and communicating

economic information contained in financial statements. A financial statement is an
organized collection of data according to logical and consistent accounting procedures. It
involves recording, classifying and summarizing various business transactions. The end
products of business transactions are the financial statements comprising primarily the
position statement or balance sheet and income statement or profit and loss account.
These sources of information on the basis of which conclusions are drawn about the
profitability and financial position of a concern, Financial statements are the basis for
decision making by the management as well as other outsiders such as investors,
creditors, customers, suppliers, financial institutions, employees, potential investors,
government and general public. According to the American Institute Of Certified Public
Accountants “Financial statement are prepared for the purpose of presenting a periodical
review of report on progress by the management and deal with the status of investment in
the business and results achieved during under review. They reflect a combination of
recorded facts, accounting principles and personal judgments.”
‘Financial statements’ generally refers to two statements:
1. The position statement or the balance sheet.
2. The income statement or profit and loss account. These statements are used to convey
to management and other interested outsiders the profitability and financial position
of a firm. Other then these two a business can also make a statement of changes in
financial position and a statement of retained earnings in addition to above two
statements. But this project is restricted to the analysis of three statements only which
are as follows:

Balance sheet: Balance sheet is one of the important statements depicting the financial
strength of the concern. Its purpose is to show the resources that the company has i.e. its
assets, and from where those resources come i.e. its liabilities and investments by owners
and outsiders. The balance sheet shows all the assets owned by the concern and all the
liabilities and claims it owes to owners and outsiders. The balance sheet is prepared on a

7
particular date. The right hand shows properties and assets. The Companies act 1956 has
prescribed a particular form for showing various assets and liabilities in balance sheet for
companies registered under this act. These companies are also required to give figures for
previous year along with current year’s figures. According to the American Institute of
Certified Public Accountants balance sheet is “A tabular balance sheet is statement of
summary of balances (debits and credits) carried forward after an actual and constructive
closing of books of account and kept according to principles of accounting.”

1) Income statement (or profit and loss account): Income statement is prepared
to determine the operational position of the concern. It is a statement of revenues
earned and the expenses incurred for earning that revenue. If there is excess of
revenue over expenditure it will show a profit and if expenditures are more than
the income then there will be a loss. The income statement is prepared for a
particular period generally a year and all revenues and expenditures falling due in
that year will be taken into account irrespective of their receipts or payments.
The income statement may be prepared in the form of a Manufacturing Account
to find out cost of production, in the form of Trading Account to determine gross
profit or gross loss, in the form of a Profit and Loss account to determine net
profit or net loss.
2) Statements of changes in financial position: This is to be prepared to show the
changes in assets and liabilities from the end of one period to the end of another
point of time. The objective of this statement is to show the movement of funds
(working capital or cash) during a particular period. The statement of changes in
financial position may take any of the following form:

2.2 OBJECTIVES OF FINANCIAL STATEMENTS

Financial statements are the sources of information on the basis of which conclusions are
drawn about the profitability and financial position of a concern. They are the major
means employed by firms to present their financial situation of owners, creditors and
general public. The primary objective of financial statements is to assist in decision

8
making. The Accounting Principles Board of America (APB) states the following
objectives of financial statements:
1) To provide reliable financial information about economic resources and
obligations of a business firm.
2) To provide reliable information about in net resources (resources less obligations)
arising out of business activity.
3) To disclose, to the extent possible, other information related to financial
statements that is relevant to the needs of the users of these Statements

2.3 MEANING AND CONCEPT OF FINANCIAL ANALYSIS

The term ‘financial analysis’ which is also known as ‘analysis and interpretation of
financial statements’ refers to the process of determining financial strengths and
weaknesses of the firm by establishing strategic relationship between the items of the
balance sheet a profit and loss account and other operative data. In the words of Myers,
“Financial statements analysis is largely a study of relationship among the various
financial factors in a business as disclosed by a single set-of statements, and a study of
the trend of these factors as shown in a series of statements.” The purpose of financial
analysis is to diagnose the information contained in financial statements so as to judge the
profitability and financial soundness of the firm. A financial analyst analysis the financial
statements with various tools of analysis before commenting upon the financial health or
weakness of an enterprise. The analysis and interpretation of financial statements is
essential to bring out the mystery behind the figures in financial statements. Financial
statements analysis is an attempt to determine the significance and meaning of the
financial statements data so that forecast may be made of the future earnings, ability to
pay interest and debt maturities (both current and long term) and profitability of a sound
dividend policy.
The term ‘financial statement analysis’ includes both ‘analysis’ and ‘interpretation.’ A
distinction should, therefore, be made between the two terms. While the term ‘analysis’ is
used to mean the simplification of financial data by methodical classification of the data
given in the financial statements, ‘interpretation’ means, ‘explaining the meaning and
significance of the data so simplified.’

9
2.4 TYPES OF FINANCIAL ANALYSIS
Financial analysis can be categorized depending upon:
1) The material used
2) The method of operation followed in the analysis or the modus operandi of analysis

(I) On the basis of material used:

According to this, financial analysis can be of following two types:

a) External Analysis: This analysis is done by outsiders who do not have access to the
detailed internal accounting records of the business firm. They include investors,
potential investors, creditors, potential creditors, government agencies and general public.
For financial analysis, these external parties to the firm depend almost entirely on
published financial statement. Therefore, external analysis serves only a limited purpose.

b) Internal Analysis: The analysis is considered by persons who have access to the
internal accounting records of a business firm is known as internal analysis. Such an
analysis can therefore be performed by executives and employees of the organization as
well as government agencies which have statutory powers vested in them.

(II) On the basis of modus operandi

According to this method of operation followed in the analysis, financial analysis can
also be of two types:
a) Horizontal Analysis: Horizontal analysis refers to the comparison of several
years in which figures of various years are compared with standard or base year.
These figures are presented horizontally over a number of columns. A base year
chosen as a beginning point. This type of analysis is also called ‘dynamic
Analysis’ as it is based on data from year to year rather than on data of any one
year. Comparison of an item once several periods with a base year may show a
trend developing.

10
b) Vertical Analysis: Vertical analysis refers to the study of relationship of the
various items in the financial statements of one accounting period. It includes
figures of financial statement of a year, which are compared with a base selected
from same year’s statement. It is also known as ‘static Analysis since vertical
analysis considers data for one time period only, it is not very conducive to a
proper analysis of financial statements.

2.5 PROCEDURE OF FINANCIAL STATEMENT ANALYSIS

In the procedure of financial statement analysis, there are mainly three steps involved.
These are:
1) Selection
2) Classification
3) Interpretation

The first step involves selection of information relevant to the purpose of analysis of
financial statements. The second step involves methodical classification of the data and
third step includes drawing of inferences and conclusions.
The following procedure is adopted for the analysis and interpretation of financial
statements:
1) The analyst should acquaint himself with the principles and postulates of
accounting. He should know the plans and policies of the management so that he
may be able to find out whether theses plans are properly executed or not.
2) The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is to find out the earning capacity of the enterprise then
analysis of income statement will be undertaken. On the other hand, if financial
position is to be studied then balance sheet analysis will be necessary.
3) The financial data given in the statement should be re-organized and rearranged. It
will involve the grouping of similar data under same hands, breaking down of
individual components of statements according to nature. The data is reduced to a
standard form.

11
4) A relationship is established among financial statements with the help of tools and
techniques of analysis such as ratios, trends, funds flow etc.
5) The information is interpreted is a simple and understandable way. The
significance and utility of financial data is explained for helping decision taking.
6) The conclusions drawn from interpretation are presented to the management in
the form of reports.

2.6 DEVICES OF FINANCIAL ANALYSIS

The analysis and interpretation of financial statement is used to determine the financial
position and results of operations as well. A numbers of methods or devices are used to
study the relationship between different statements. An effort is made to use those
devices, which clearly analyses the position of the enterprise.

2.7 METHOD AND TOOLS FOR THE ANALYSE THE FINANCIAL

STATEMENTS
1. Comparative Statements
2. Common Size Statements
3. Ratio Analysis
4. Trend Analysis

12
2.7.1 COMPARATIVE STATEMENTS

The comparative financial statements are statements of the financial position at

different period; of time. The elements of financial position are shown in a comparative
form so as to give an idea of financial position at two or more periods. From practical
point of view, generally, two financial statements (balance sheet and income statement)
are prepared in comparative form for financial analysis purpose. Not only the comparison
of the figure of two periods but also be relationship between balance sheet and income
statement may show:

i. Absolute figures (rupee amounts)

ii. Changes in absolute figures (increase or decrease in absolute figures)
iii. Absolute data in term of percentages
iv. Increase or decrease in terms of percentages

3. COMPARATIVE BALANCE SHEET

The comparative balance sheet analysis is the study of the trend of the same
items, groups of items and computed items in two or more balance sheets of the same
business enterprise on different dates. The changes can be observed by comparison of the
balance sheet at the beginning and at the end of a period and changes can help in forming
an opinion about the progress of an enterprise.
The comparative balance sheet has two columns for the data of original balance
sheets. A third column is used to show increase in figures. The fourth column may be
added for giving percentages of increases or decreases.

4. COMPARATIVE INCOME STATEMENT

The comparative income statement gives an idea of a business over a period of

time. The changes in absolute data in money values and percentages can be determined to
analyze the profitability of the business. It has also four columns. First two columns give
figures of various items for two years. Third and fourth columns are used to show
increase or decrease in figures in absolute amounts and percentages respectively.

13
2.7.2 FUND FLOW STATEMENT

Definition of Fund
A question arises as to the definition of “FUND”. It means:
 Funds may mean change in cash only;
 Funds may mean change in working capital (the difference between current assets
and current liabilities) only.
A more comprehensive definition of funds may be given as follows:
 Funds may mean change in financial resources, arising from changes in working
capital items and from financing and investing activities of the enterprise, which
may involve only non-current items.
The funds flow statement analyses only the causes of changes in the firm’s
working capital position. The cash flow statement is prepared to analyze changes in the
flow of cash only. These statements fail to consider the changes in the firm’s total
financial resources. They do not reveal some significant items that do not affect the firm’s
cash or working capital position, but considerably influence the financing position and
asset mix of the firm.
The statement of changes in financial position is an extension of the funds flow
statement or the cash flow statement. Therefore, to get better insights, a firm may prepare
a comprehensive, all inclusive, statement of changes in financial position incorporating
changes in the firm’s cash and working capital positions involving:

 Changes in the firm’s working capital position,

 Changes in the firm’s cash position, and
 Changes in the firm’s total financial resources.

14
2.7.3 RATIO ANALYSIS

 MEANING OF RATIO

A ratio is a simple arithmetical expression of the relationship of one number to

another. According to Accountant’s Handbook by Wixon, Kell and Bedford, a ratio “is an
expression of quantitative relationship between two numbers”. According to Kohler, a
ratio is the relation, of the amount a, to another, b, expressed as the ration of a to b, a:b (a
is to b); or as a simple fraction, integer, decimal, fraction or percentage.
A financial ratio is the relationship between two accounting figures expressed
mathematically. A ratio can also be expressed as percentage by simply multiplying the
ratio by 100. Ratios provide clues to the financial strength, soundness position or
weakness of an enterprise. One can draw conclusions about the exact financial position of
a concern with the help of ratios.

 MEANING AND CONCEPT OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of financial statements.

It is the process of establishing and interpreting various ratios for helping in making
certain decisions. However, ratio analysis is not an end itself. It is only a means of better
understanding of financial strength and weakness of a firm. Calculation of ratios does not
serve any purpose, unless several appropriate ratios are analyzed and interpreted. There
are a number of ratios which can be calculated from the information given in the financial
statements, but the analyst has to select the appropriate data and calculate only a few
appropriate ratios from the same keeping in mind the objective of analysis. The following
are four steps involved in the ratio analysis:
 Selection of relevant data from financial statement depending upon objective of
analysis.
 Calculation of the appropriate ratios from the above data.
 Comparison of the calculated ratios with the ratio of same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms
or the comparisons with ratios of the industry to which the firm belongs.

15
 Interpretation of the Ratios

Ratio analysis is one of the most powerful tools of financial analysis. It is used as
a device to analyze and interpret the financial health of enterprise. It is with help of ratios
that the financial statements can be analyzed more clearly and decisions made from such
analysis. The use of ratios is not confined to financial managers only. There are different
parties interested in the ratio analysis for knowing the financial position of a firm for
different purposes. The supplier of goods on credit, banks, financial institutions, investors,
shareholders and management all make use of ratio analysis as a tool in evaluating the
financial position and performance of a firm for granting credit, providing loans or
making investments in the firm. With the use of ratio analysis, one can measure the
performance of the firm is improving or deteriorating. Thus, Ratios have wide
applications and are of immense use today.

 Guidelines or precautions for use of ratio:

1. Accuracy of financial statements: The ratios are calculated from the data
available in financial statements. Before calculating ratios one should see whether
proper concepts and conventions have been used for preparing financial statements
or not. These statements should also be properly audited by competent auditors.
The precautions will establish the reliability of data given in financial statements.
2. Objective or purpose of analysis: The type of ratios to be calculated will depend
upon the purpose for which these are required. The purpose or object for which
rations are required to be studied should always be kept in mind for studying
various ratios. Different objects may require the study of different ratios.
3. Selection of ratios: Another precaution in ratios analysis is the proper selection of
appropriate ratios. The ratios should match the purpose for which these are
required. Only these ratios should be selected which can throw proper light on the
matter to be discussed.
4. Use of standards: The ratios will give on indications of financial position only
when discussed with reference to certain standard. These standard may be rule of

16
 thumb as in case of current ratio {2:1}and acid test ratio{1:1}, may be industry
standards, may budgeted or projected ratios etc.
5. Caliber of the analyst: The ratios are the only tools of analysis and their
interpretation will depend upon the caliber and competence of the analyst. He
should be familiar with various financial statements and the significance of
changes etc.
6. Ratios provide only a base: The ratios are only guidelines for the analyst he
should not base his decision entirely on them. He should study any other relevant
information, situation in the concern, general economic environment etc. before
reaching final conclusions.

 Functional classification or classification according to tests

In view of financial management or according to tests satisfied, various ratios

have been classified as below:
1. Liquidity ratios: These are the ratios, which measure the short term solvency or
financial position of the firm and are calculated to comment upon the short term
paying capacity of concern or firm’s ability to meet its current obligations. The
various liquidity ratios are: current ratio, liquid ratio and absolute ratio.
2. Long term solvency and leverage ratios: Long term solvency ratios convey
firms ability to meet the interest cost and repayment schedule of its long term
obligations, example debt equity ratio and interest coverage ratio. Leverage
ration show the proportions of debt and equity in financing of the firm.
3. Activity ratios: Activity ratios are calculated to measure the efficiency with
which the resources of a firm have been employed. These ratios are also called
turnover ratios because it indicates the speed with which assets are being turned
over in to sales example debtor turnover ratio.

 Classification according to significance or importance

The Ratios have also been classified according to their significance or

importance. Some ratios are more important than others and the firm may classify them

17
as primary and secondary ratios. The British Institute of management has recommended
the classification of ratios according to importance for inter firm comparisons. For inter
firm comparisons, the ratios may be classified as primary and secondary ratios. The
primary ratio is one which is of prime importance to a concern, thus return on capital
employed is named as primary ratio. The other ratios which support or explain the
primary ratio are called secondary ratio, e.g. the relationship of operating profit to sales
or the relationship of sales to total assets of the firm.
 Analysis Of Short-Term Financial Position

The short-term obligation of a firm can be met only when there are sufficient
liquid assets. If a firm fails to meet such current obligations, its goodwill in the market is
likely to be affected beyond repair. Moreover a very high degree of liquidity will tie
funds in current assets.
Therefore it is necessary to have a proper balance in regard to liquidity of the firm. Two
types of ratio are calculated to measure short-term solvency of a firm.
I) LIQUIDITY RATIOS
II) EFFICIENCY RATIOS
III) SOLVENCY RATIOS
IV) PROFITABILITY RATIOS
I) LIQUIDITY RATIO
It refers to the ability of a concern to meet its current obligation as and when these
become due. The short-term obligations are met by realizing amounts from current,
floating or circulating assets. These should be convertible into cash for paying obligations
of short – term nature. The sufficiency or insufficiency of current assets should be
assessed by comparing them with short-term liabilities. If current assets can pay-off
current liabilities, the liquidity position is satisfactory. On the other hand, if current
liabilities may not easily met out of current assets then the liquidity position will be bad.
To measure liquidity of a firm, the following ratios can be calculated:
(i) Current ratio
(ii) Quick ratio
(iii) Absolute quick ratio

18
CHAPTER-3

19
 REVIEW OF LITERATURE
The review of literature guides the researchers for getting better understanding of
methodology used, limitations of various available estimation procedures and data base
and lucid interpretation and reconciliation of the conflicting results. Besides this, the
review of empirical studies explores the avenues for future and present research efforts
related with the subject matter. In case of conflicting and unexpected results, the
researcher can take the advantage of knowledge of other researchers simply through the
medium of their published works.

Muhammad Rafiqul Islam (2001) “Working Capital Management of Paper Mills in

Bangladesh-An Overall View” concluded that all the units of the paper industry had
failed to manage their working capital requirements properly. The reasons for working
capital crisis were improper use of short-term funds, operating losses, over stocking to
stores and spares; and non-availability of rawmaterials.

Harris (2003) analyses the link between market orientation and performance has been
claimed largely on the basis of the analysis of subjective measures of performance.
Consequently, the aim of this study is to examine the links between market orientation
and objectively measured financial performance. The paper begins with a brief
examination of the definition and components of market orientation. Thereafter, extant
research into the consequences of developing market orientation is reviewed critically,
leading to the development of a number of research hypotheses.

Sahu (2005) in his article titled “A Simplified Model for Liquidity Analysis of Paper
Industry” has examined the liquidity of paper industry. The model developed by him has
been based on the assumption that the liquidity management of a company in a particular
year is effective if its‟ earnings before depreciation is positive and not effective if its‟
earnings before depreciation is negative. The findings have revealed a very high
predictive ability of the estimated discriminant function.

20
Sukhdev Singh & et al. (2006) undertook a study entitled “Status and Growth of Paper
and Pulp Board Industry in North India – A Case study”. The study has revealed that due
to the availability of raw materials and labour, eighty per cent of the mills are running
with the optimum capacity utilization. The authors have observed that more than three
thousand people have got employment in ten paper and paper board mills with
proporation of thousand eight hundred skilled workers and thousand two hundred
unskilled labours.

Alovsat Muslumov (2007) “The Financial and Operating Performance of Privatization

Companies in Turkish Cement Industry”. This paper examines the post- privatization
performance of privatized companies in the Turkish cement industry. The findings
indicate that, when performance criteria for both the state and private enterprises are
considered, privatization in the cement industry results in significant performance
deterioration. Total value added and the return on investment declines significant after
privatization. This decrease mainly stems from deterioration in asset productivity.

Sudarsana Reddy & et al. (2008) Examined the internal funds availability for financing
fixed assets in paper industry in Andhra Pradesh. The study found that the owner funds
were insufficient to finance fixed assets and observed that fixed assets did not have
significant relationship with the sales.

Vishnani and Shah (2009) investigated the impact of working capital management
policies on the corporate performance of the India consumer electronics industry. They
noted that inventory holding period, debtors‟ collection period and net working capital
cycle had negative relationship on the profitability of firms. Whereas, the average
payment periods positive correlation with profitability

Krishnaveni (2010) studied the performance appraisal might be said that the adoption of
liberalization measure and above suggestions would doubtlessly help the Indian chemical
industry to improve their performance individually and other industry as a whole. This
study also suggests that the policy of liberalization should further be strengthened. Thus,

21
the dreams of our planners to accelerate the economic growth in the country are still
possible to be translated into reality

Ramanchandran and Janakiraman (2011) analyzed the relationship between working

capital management efficiency and earnings before interest and tax of the paper industries
in India. The study revealed that cash conversion cycle and inventory days had negative
correlation with earning before interest and tax. While accounts payable days and
accounts receivable days related positively with earning before interest and tax.

Dharmendra Mistry (2012) in his study “A Comparison of Financial Performance of

Major Gujarat Pharma” players through value added and economic value added”. The
purpose of this study is to classify major Gujarat pharmacy players in cohesive categories
on the basis of their financial characteristic revealed by the financial statements. The
study also revealed that economic value added has also positive correlation with firm
size, funds of proprietors, and funds of money lenders and have significant impact on
economic value added.

Neha Mittal (2013) studies the determination of capital structure choice of the selected
Indian industries. The main objective is to investigate whether and to what extent the
main structure theories can explain the capital structure choice of Indian firms. It has
applied multiple regression models on the selected industries by taking data for the period
2001-2008. It examines the relevance of capital structure in selected Indian industries
based on a regression analysis and data study. It concludes that the main variables
determining capital structure of industries in India are agency cost, assets structure, non-
debt tax shield and size. The coefficients of these variables are significant at one per cent
and five per cent levels.

Kartik Chandra Nandi (2015) in his study “Trends in Liquidity Management and Their
Impact on Profitability: A Case Study”. Made an attempt to observe the trend values of
liquidity position of the company and study the correlation between liquidity and
profitability. An attempt has also been made to establish the linear relationship between

22
liquidity and profitability with the help of a multiple regression model. The study used
various statistical tests viz. t-test, F-test and Durbin-Watson test and has been applied in
order to test the significance of the results obtained. He concluded that the selected
company always tries to maintain adequate amount of net working capital in relation to
current liabilities so as to keep a good amount of liquidity throughout the study period.

Vivek Kumar and Major Singh (2017) conducted a study on “Profitability of Indian
Banks – A Comparative Study of SBI and HDFC”. The study revealed that the various
profitability ratios of two banks as the measure of profitability. The common denominator
used for developing the various profitability ratios is business volume (deposits plus
advances). The study analyses the published five-year data from 2007-08 onwards for the
two largest banks, i.e., SBI- the largest public sector bank and HDFC- the largest private
sector bank. The comparative analysis of the profitability of the two banks clearly reveals
that there is a large difference between the profitability of the two banks. HDFC‟s
profitability is more than that of SBI.

23
CHAPTER-4

24
 RESEARCH METHODOLOGY

FORMULATING RESEARCH PROBLEM

I have studied the concept of FINANCIAL ANALYSIS and I have also carried the
analysis of GARG INDUSTRIES LTD.

OBJECTIVES

 To study the Garg industries and to explore the Garg Industries Ltd.

 To study the financial analysis of Garg Industries Ltd.

SOURCE OF DATA

I have used the information gathered through secondary data which include mainly the
Annual Reports of Garg Industries Ltd.

DATA ANALYSIS

The statistical techniques like comparative balance sheet, common size balance sheet
have been used in the study. These have been very useful in doing the interpretation and
analysis of the data collected through secondary sources.

LIMITATIONS OF THE STUDY

Following limitations were encountered while preparing this project:

1) Limited data: This project has completed with annual reports; it just constitutes
one part of data collection i.e. secondary. There were limitations for primary data
collection because of confidentiality.
2) Limited period: This project is based on two year annual reports. Conclusions and
recommendations are based on such limited data. The trend of last two year may
or may not reflect the real working capital position of the company

25
3) Limited scope: Also it was difficult to collect the data regarding the competitors
and their financial information. Industry figures were also difficult to get as this
project is based only on the annual reports of Garg Industries Ltd..

26
CHAPTER-5

27
 DATA ANALYSIS AND INTERPRETATION

GARG INDUSTRIES LTD.

I) COMPARATIVE STATEMENT
A) Comparative Balance Sheet
Particulars 2017 2018 Increase/Decrease %age
Assets

Fixed Assets 1968881237 1893341411 - 75539826 -3.84

Investments 2851504001 3843437861 +991933860 +34.79
Deferred Tax Assets (Net) 4892714 19845655 +14952941 +305.62
Current Assets
- Inventories 766521142 805661034 +39139892 +5.11
- Sundry Debtors 1860512457 2228592486 +368080029 +19.78
- Cash & Bank Balance 69481654 22134657 - 47346997 -68.14
Loan and advances 337661837 457780835 +120168998 +35.57

Total Assets 7859455042 9270793939 +1411338897 +17.95

Liabilities

Shareholder Fund 4427446105 5364231022 +936784917 +21.16

Loan Funds 1567876432 1732223697 +164347265 +10.48
Current Liabilities
- Liabilities 1640425867 1978589143 +338163276 +20.61
- Provisions 223706638 19575007 -27956561 -14.28

Total Liabilities 7859455042 9270793939 +1411338897 +17.95

Interpretation
1. Comparative Balance Sheet reveals that total Assets of Agricultural Engineering
Industry increased during a year by 17.95%.
2. There has been increase in shareholder funds by 21.16%.

GARG INDUSTRIES LTD.

28
B) Comparative Income Statement
Particulars 2017 2018 Increase/ %age
Decrease
(Rs).
Net Sales 11369337410 13308705116 +1939367706 +17.06
Less : Cost of Goods Sold 9756380835 11733069767 +1976688932 +20.26
(Material consumed,
manufacturing expenses &
personal expenses)
Gross Profit 1612956575 1575635349 -37321226 -2.31

Less : Operating expenses 1147615431 1139418653 -8196778 -1.76

(Administrative expenses,
financial expenses, selling
expenses & depreciation)

Operating profit/loss 465341144 313168939 -29124448 -6.25

Add: Other income 1077448184 898158858 -179289326 -16.64
Less:non operating exp. 906615865 123047757 -783568108 -86.43
Net profit Before Tax 636173463 121132797 +575154334 +90.41

Less : Tax provision for -28757839 185742059 +214499898 +745.88

wealth tax, taxation, fringe
benefit tax & deferred tax

Net profit After tax 664931302 1025585738 +360654436 +54.24

Interpretation
There has been decrease in the gross profit by 2.31% because the rate of increase
in sales is less than the rate of increase in cost of goods sold. But the non operating
expenses decreases by 86.43% so net profit increases.

II) COMMON SIZE STATEMENT

A) Common Size Balance Sheet

Particulars 2017 2018

Amount (Rs.) %age Amount (Rs.) %age
Assets

29
Fixed Assets 1968881237 25.05 1893341411 20.42
Investments 2851504001 36.28 3843437861 41.46
Deferred Tax Assets (Net) 4892714 0.06 19845655 0.22
Current Assets
- Inventories 766521142 9.76 805661034 8.69
- Sundry Debtors 1860512457 23.67 2228592486 24.04
- Cash & Bank Balance 69481654 0.88 22134657 0.24
Loan and advances 337661837 4.30 457780835 4.93

Total Assets 7859455042 100.00 9270793939 100.00

Liabilities

Shareholder Fund 4427446105 56.33 5364231022 57.86

Loan Funds 1567876432 19.95 1732223697 18.69
Current Liabilities
- Liabilities 1640425867 20.87 1978589143 21.34
- Provisions 223706638 2.85 19575007 2.11

Total Liabilities 7859455042 100.00 9270793939 100.00

Interpretation

The investment in fixed assets, current assets and investment are same
in both the years. The ratio of shareholders funds and the loan funds are
do not change much.

II) COMMON SIZE STATEMENT

B) Common Size Income Statement

Particulars 2017 2018

Amount (Rs.) %age Amount (Rs.) %age
Net Sales 11369337410 100.00 13308705116 100.00
Less : Cost of Goods Sold 9756380835 85.81 11733069767 88.16
(Material consumed,
manufacturing expenses &
personal expenses)

Gross Profit 1612956575 14.19 1575635349 11.84

Less : Operating expenses 1147615431 10.09 1139418653 8.56
(Administrative expenses,
financial expenses, selling
expenses & depreciation)

30
Operating profit/loss 1147615431 4.09 1139418653 3.28
Add: Other income 1077448184 9.48 898158858 6.75
Less:non operating exp. 906615865 7.97 123047757 0.92
Net profit Before Tax 636173463 5.60 121132797 9.10
Less : Tax provision for -28757839 -2.53 185742059 1.40
wealth tax, taxation, fringe
benefit tax & deferred tax
Net profit After tax 664931302 5.85 1025585738 7.71

Interpretation
In 2017 the cost of goods sold is 85.81% of sales which increase to 88.16% in
year 2018 resulting the decrease in gross profit from 14.19% to 11.84% but the company
is successful in controlling non operating expenses i.e. 7.97% to 0.92% so net profit
increases in 2018.

GARG INDUSTRIES LTD.

Cash Flow Statement

Particulars 2017 2018 Increase/ %age

Decrease
Profit Before Tax 6361.73 12113.28 +5751.55 90.41
Net Cash Flow Operating Activity 8382.83 2996.85 -5385.98 -64.25

Net Cash used in Investing -4988.22 -3143.35 -1844.87 -36.98

Activity

Net Cash used in Financing -3471.47 -326.97 -3144.50 -90.58

Activity

Net Inc/Dec in Cash & -76.86 -473.47 +396.61 +516.02

Equivalent
Cash and Equivalent at the 771.68 694.82 -76.86 -9.96
Begin of the Year

Cash and Equivalent at the 694.82 221.35 -473.47 -68.14

31
End of the Year

Statement of Changes in Working Capital

Particulars 2017 2018 Effect on Working

Capital
Increase Decrease
Current Assets
- Inventories 766521142 805661034 39139892 -
- Sundry Debtors 1860512457 2228592486 368080029 -
- Cash & Bank Balance 69481654 22134657 - 47346997
(A) 2696515253 3056388177
Current Liabilities
- Liabilities 1640425867 1978589143 - 338163276
- Provisions 223706638 195750077 27956561 -
(B) 1864132505 2174339220
Working capital (A-B) 832382748 882048957 - -
Net increase in working 4966209 - - 49666209
capital
Total 882048957 882048957 435176482 435176482

Note : Provision should be taken as current liability

32
 FUND FLOW STATEMENT
Sources Amount Applications Amount
(Rs.) (Rs.)
Raising of Loans 164347265 Net Increase in Working Capital 49666209
Funds from operation 1135177199 Purchase of Investment 991933860
Purchase of Fixed Assets 137805397
Loan of Advances given 120168998
1299524464 1299524464

WORKING NOTES
Adjusted Profit and Loss Account

Particulars Amount Particulars Amount

(Rs.) (Rs.)
To Dep. on fixed 213345223 By Balance b/d 4029233305
Assets
To Balance c/d 4966018222 By Deferred Tax 14952941
By Fund from Operation 1135177199
(Bal. Figure)
5179363445 5179363445

FIXED ASSETS
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Balance b/d 1968881237 By Adjusted P & L A/c (Dep.) 213345223

To purchase on Fixed 137805397 By Balance c/d 1893341411

Assets (Bal. figure)

2106686634 2106686634

Interpretation : As seen from the above analysis that there is increase in working capital
which, indicate that company is having sufficient current assets to pay back the current
liabilities in time. There is increase in amount of loans by 10.48% and it is being utilized
in financing the fixed assets & investments.

33
(i) Current Ratio
It is also known as Working capital ratio. It is a measure of liquidity and used in making
analysis of short term financial position.
Current Ratio = Current Assets / Current Liabilities.
Year 2017 2018
Current assets 2696515253 3056388177
Current liabilities 1640425867 1978589143
Current Ratio 1.64 1.54

TABLE 5.1 (Current Ratio)

Current assets Current liabilities

3500000000
3000000000
2500000000
2000000000
1500000000
1000000000
500000000
0
2017 2018
Years

FIGURE 5.1

34
 Current Ratio

1.5

0.5

0
2017 2018
Years

Interpretation : It is decreasing in the year 2018 because current liabilities are increased
this year as compare to 2017. Overall this ratio is satisfactory as it is nearest to the thumb
rule i.e. 2:1

(ii) Liquid Ratio

Liquid Ratio is more rigors test of liquidity than the current ratio. It is the ratio
between quick ratio & current liabilities. Quick ratio refers to all current assets except
Inventory & prepaid expenses.
Liquid Ratio = Liquid assets / Current Liabilities
Liquid assets = Current Assets- Prepaid Exp – Inventories

Year 2017 2018

Liquid assets 1929994111 2250727143
Current liabilities 1640425867 1978589143
Liquid Ratio 1.18 1.14

TABLE 1.2(Liquid Ratio)

35
 Liquid assets Current liabilities

2500000000

2000000000

1500000000

1000000000

500000000

0
2017 2018
4
Years

Liquid Ratio

1.5

0.5

0
2017 2018
Years

FIGURE 5.2

36
Interpretation: As seen from the analysis this ratio is almost same in both the years quite
satisfactory with a thumb rule i.e. 1.5 : 1. Company’s current assets involved large
amount of debtors in it.

(iii) Absolute Liquid Ratio

Cash is the most liquid ratio asset. Absolute liquid assets include Cash in hand,
Cash at bank, marketable securities or temporary investments.
Absolute Liquid Ratio = Absolute Liquid Assets / Current Liabilities
Absolute Liquid Assets = Cash + Bank + Marketable Securities

Year 2017 2018

Absolute Liquid assets 69481654 22134657
Current liabilities 1640425867 1978589143
Absolute Liquid Ratio 0.04 0.01

TABLE 5.3 (Absolute Liquid Ratio)

Absolute Liquid assets Current liabilities

2500000000

2000000000

1500000000

1000000000

500000000

0
2017 2018

FIGURE 5.3

37
 Absolute Liquid Ratio

0.06
0.05

0.04
0.03
0.02

0.01
0
2017 2018
Years

Interpretation: Viewing the trend of the cash ratio of both the years it can be said that
this ratio is not satisfactory because cash and bank balance has been decreased very much
in the year 2018 approx. 68%.

38
II) EFFICIENCY RATIOS OR ACTIVITY RATIOS

Activity ratio measures the efficiency and the effectiveness with which a firm can
manage its resources. These are known as the Turnover ratios, because they indicate the
speed with which assets are converted into cash.

Major ratio given as under:

1. Working capital ratio
2. Inventory turnover ratio
3 Debtor turnover ratio
4. Creditor turnover ratio

1. Working Capital Turnover Ratio

It indicates the velocity of utilization of net working capital. It indicates the
efficiency with which working capital is being used by the company.
Working Capital Turnover Ratio = Net Sales /Average working capital

Year 2017 2018

Net sales 11369337410 13308705116
Average working capital 1170612956.5 1066944210
Working Capital Turnover Ratio 9.71 12.47

TABLE 2.1 (Working Capital Turnover Ratio)

39
 Working Capital Turnover Ratio

15

10
Time

0
2017 2018
Years

FIGURE 5.4
Interpretation : Working capital turnover ratio is increasing as we can see from the
above table becomes 12.47 in 2018 from 9.71 in 2017 due to increase in sales

2. Inventory Turnover Ratio

It indicates whether the inventory has been efficiently used or not. It indicated the
number of times the stock has been turned over during the period and evaluates the
efficiency with which a firm is able to manage its inventory.

Inventory Turnover Ratio : Net Sales / Avg. Inventory at Cost

Year 2017 2018
Net sales 11369337410 13308705116
Average inventory at cost 708281512.5 786091088
Inventory Turnover Ratio 16.05 16.93

TABLE 5.5 (Inventory Turnover Ratio)

40
 Inventory Turnover Ratio

20

15
Time
10

0
2017 2018
Years

FIGURE 5.5

Interpretation : As seen from the analysis there has been slight increase in the ratio.
Being a manufacturing concern company has to maintain large amount of inventories in
different forms but on the other side sales are increasing so it is good sign for the
company.

41
3. Inventory Conversion Period

It is calculated to see the average time taken for clearing the stocks.
Inventory conversion period = No. of days in a year /Inventory Turnover Ratio

Year 2016 2017

No. of days in a year 365 365
Inventory Turnover Ratio 16.05 16.93
Inventory conversion period 23 (days) 22 (days)

TABLE 5.6 (Inventory Conversion Period)

Inventory conversion period

25

20

Time
15

10

0
2016 2017
Years

FIGURE 5.6

Interpretation: The company’s inventory conversion period is approximate 25 days

which indicates there is no fear of obsolesce of material.

4. Debtor Turnover Ratio

This ratio indicates the velocity of debt collection generally higher the ratio means
the more efficient management of debtors or more liquid are debtors and vice verse.
42
 Debtor Turnover Ratio = Total sales / Average Trade Debtors

Year 2017 2018

Total Sales 11369337410 13308705116
Average trade debtors 1844321481 2044552471.5
Debtor Turnover Ratio 6.17 6.51

TABLE 5.7 (Debtor Turnover Ratio)

Debtor Turnover Ratio

10

Days6

0
2017 2018
Years

FIGURE 5.7

Interpretation: This ratio has been increased by 34% due to increase in sales but at the
same time debtors are also increasing which is not feasible in long run.

43
5. Average Collection Period
It represents the average number of days for which a firm has to wait before its
receivables are converted into cash.

Aver. Collection period = Number of days in a year / Debtor Turnover Ratio

Year 2017 2018

No. of days in a year 365 365
Avg. Collection period 6.17 6.51
Average Collection Period 59 days 56 days

TABLE 5.8(Average Collection Period)

Average Collection Period

60
50

40
Days
30
20

10
0
2017 2018
Years

FIGURE 5.8

Interpretation : Company’s average collection period is approximate 60 days or two

months. It means company’s is allowing sufficient time to debtors. It should not be very
much increasing in the long run.

6. Creditor Turnover Ratio

44
 This ratio indicates the velocity with which the creditors are turned over in
relation to purchases. Generally higher the ratio better it is or otherwise lower the creditor
velocity, less favorable are the results.

Creditor Turnover Ratio = Annual Purchases / Average Creditors.

Year 2017 2018
Annual purchases 8450144997 10318618457
Average creditors 1219309612 1499180490.5
Creditor Turnover Ratio 6.93 6.88

TABLE 5.9(Creditor Turnover Ratio)

Creditor Turnover Ratio

20

15

Days10

0
2017 2018
Years

FIGURE 5.9

45
7. Average Payment Period

Average Payment Period = No. of days in a year / Creditor Turnover Ratio

Year 2017 2018

No. of days in a year 365 365
Creditor Turnover Ratio 6.93 6.88
Average Payment Period 53 (days) 53 (days)

TABLE 5.10 (Average Payment Period)

Average Payment Period

60

50

40
Days30
20

10

0
2017 2018
Years

FIGURE 5.10

Interpretation: The payment track record of the company is properly designed such that
timely payment is made to the suppliers. By analyzing the trend it can be said that
creditors are paid within two months this shows as and when payment is received from
the debtors then it is being paid and more over company is enjoying credit policy by the
creditors.

III) SOLVENCY RATIOS

46
 The term ‘solvency’ refers to ability of a concern to meet its long-term
obligations. The long-term indebtness of a firm includes debenture-holders, financial
institutions providing medium and long-term loans and other creditors selling goods on
installments basis .Long-term solvency ratio indicate a firm’s ability to meet the fixed
interest and costs and repayment schedules associated with its long-term borrowings.

Following solvency ratios have been used for this purpose:-

(1) Debt-equity ratio

(2) Equity ratio
(3) Solvency ratio
(4) Fixed assets to net worth

(1) Debt Equity Ratio

It shows the relationship between external and internal equities & it is calculated
to measure the claim of outsiders and owners against company’s assets
The outsider's funds include all debts/ liabilities to outsiders, whether in form of
debentures, bonds, mortgage or bills.
The shareholders funds include equity + preference share capital included capital
reserve, revenue reserve and reserves representing accumulated profits and surpluses.

Debt Equity Ratio = Long term Debts / Shareholders Funds*100

Year 2017 2018
Long term Debts 1567876432 1732223697
Shareholders Funds 4427446105 5364231022
Debt Equity Ratio 35.41 32.29

TABLE 5.11 (Debt Equity Ratio)

47
 Debt Equity Ratio

40

Percentage
30

20

10

0
2017 2018
Years

Interpretation : There has been a slight decrease in this ratio due to the fact that now the
company is relying more on own funds then on outsiders funds. As such ratio has been
improved and that amount is blocked in inventories.

(2) Equity Ratio

Establish the relationship between shareholders funds and total assets of the
company, the components of this ratio are
Equity Ratio = Shareholder’s Funds / Total Assets *100
Year 2017 2018
Shareholder’s Funds 4427446105 5367231022
Total Assets 7516900491 8793167449
Equity Ratio 59 61

TABLE 5.12(Equity Ratio)

48
 Equity Ratio

70
60
Percentage

50
40
30
20
10
0
2017 2018
Years

Interpretation : Company is relying more shareholder funds than on loan funds. This is
favourable point for the creditors as company’s equity ratio in 2017 is 59% and in 2018 is
61% .

3. Solvency Ratio
This ratio indicates the relationship between total liabilities to outsiders & total
assets of the company.

Solvency ratio = 100- Equity ratio

Year Solvency Ratio

2016 41

2017 39

TABLE 5.13(Solvency Ratio)

49
 Solvency Ratio

50

40
Percentage
30

20

10

0
2017 2018
Years

Interpretation : .The ratio in 2017 is 41% and in 2018 is 39% , so it implies lower the
ratio of total liabilities to total assets, more satisfactory/stable in the long term solvency
position of the firm.

4. Fixed Assets to Net Worth Ratio

The ratio established the relationship between fixed assets and shareholders funds
i.e. share capital plus, reserves and surplus and retained earning The ratio can be
calculated as follows: Fixed Assets to Net worth Ratio = Fixed Assets (after Dep.) /
Shareholder funds * 100 Fixed Assets to Net Worth Ratio

50
Year
Percentage 2017 2018
Fixed Assets (after Dep.) 1968881237 1893341411
40
Shareholder funds 4427446105 5364231022
Fixed Assets
30 to Net Worth Ratio 44.47 35.30
TABLE 5.14 (Fixed Assets to Net worth Ratio)
20

10

0 50
2017 2018
Years
 FIGURE 3.4

Interpretation: the company’s fixed assets to net worth is 44.47% and 35.30% in years
2017 and 2018. It implies that owners funds are more than total fixed assets and a part of
the working capital is provided by the shareholders.

51
IV PROFITABILITY RATIOS
The following ratios are known as general profitability ratio

1) G.P. Ratio
2) N.P. Ratio
3) Return on Investment

1. Gross Profit Ratio

Gross profit ratio measures the relationship of gross profit to net sales and is
usually represented as a percentage. Thus it is calculated by dividing the gross profit by
sales.

Gross Profit Ratio = Gross Profit / Sales * 100

Year 2017 2018

Gross Profit 1612956575 1575635349
Sales 11369337410 13308705116
Gross Profit Ratio 14.19 11.84
TABLE 5.15(Gross Profit Ratio)

Gross Profit Ratio

20
Percentage

15

10

0
2017 2018
Years

FIGURE 5.15

52
Interpretation: There has been decrease in the Gross Profit by 2.31% because the
rate of increase in sales is less than the rate of increase in cost of goods sold.

2. Net Profit Ratio

Net profit ratio established a relationship between net profit and sales.
This ratio is the overall measure of firms profitability and is calculated as:

Net Profit Ratio = Net profit after tax / Net Sales *100

Year 2017 2018

Net profit after tax 664931302 1025585738
Net sales 11369337410 13308705116
Net Profit Ratio 5.84 7.71

TABLE 5.16(Net Profit Ratio)

Net Profit Ratio

10
Percentage
8

0
2017 2018
Years

FIGURE 5.16

Interpretation : There has been decrease in the Gross Profit by 2.31% because
the rate of increase in sales is less than the rate of increase in cost of goods sold.
The non- operating expenses decrease by 86.43% so net profit increases.

53
3. Return on Investment
Return on Investment = Profit Before interest and taxes / Total investment
*100

Year 2017 2018

Profit Before interest and taxes 636173463 1211327797
Total investment 28515040014 3843437861
Return on Investment 22.31 31.52
TABLE 5.17(Return on Investment)

Return on Investment

35
30
Percentage
25
20
15
10
5
0
2017 2018
Years

FIGURE 5.17

Interpretation: The Company’s overall profitability is improving as return

on investment increases from 22.31% to 31.52%.

54
CHAPTER-6

55
 FINDINGS

1. Company’s is utilizing long term loans to finance fixed assets and investments but
it has started relying on own funds.
2. There is decrease in gross profit of the company due to increase in cost of goods
sold but there is increase in net profits due to decrease in non operating expense.
3. Debtors are also increasing which is not good sign for the company in long run.
4. Current liabilities are increasing by 20.61%. Where as cash decreases very much
by 68.14%
5. There is stability in equity share capital.
6. Company earned less profits as compare to previous year.
7. The overall picture of the company is good. No doubt there are some obstacles in
earning of profits.
8. Company is not able to meet the previous year’s sales because of some labour
strikes in company as result of lack of coordination between management and
labours.

At the end we can say that company is gone behind one year caused by strikes.

56
CHAPTER-7

57
 SUGGESTIONS

1. The Company is enjoying a good current position. It should take steps to further
improve its position by repositioning the composition of current assets as large
amount has been block in debtors and inventories.

2. Large amounts of funds are blocked in debtors. Company should reduce its
debtors so that the blocked amount is properly utilized.

3. Inventory control is not proper. The Company has not defined the minimum and
the maximum stock level scientifically. Therefore there is blockage of funds.
Moreover, the safety stock level is also not defined. So the company should apply
the proper Inventory Control System so that there is no wastage of funds.

4. Company should focus on coordination with management and labours.

5. Company should focus on maximization of profits and sales.

6. Lack of adequate service backup.

58
59
 BIBLIOGRAPHY

Books:

Title Author Publishers

Management Accounting R.K. Sharma Kalyani Publishers,

New Delhi
Financial Management Panday I.M. Vikas Publisher House,
New Delhi

Financial Management Khan M. Y. Tata Mc-Graw Hill,

& Jain P.K. New Delhi

Research Methodology S.K. Gupta Kalyani Publishers

New Delhi

Web Sites: -

www.investopedia.com

www.gargindustriesltd.com

www.google.com

Annual Reports of Garg Industries Ltd.

2017-2018

60
61
 BALANCE SHEET AS AT 31 MARCH 2017

Liabilities Amt. Assets Amt.

Shareholder Fund 4427446105 Fixed Assets 1968881237
Loan Funds 1567876432 Investments 2851504001
Current Liabilities Deferred Tax Assets (Net) 4892714
- Liabilities 1640425867 Current Assets

- Provisions 223706638 - Inventories 766521142

- Sundry Debtors 1860512457

- Cash & Bank Balance 69481654

Loan and advances 337661837

Total Liabilities 7859455042 Total Assets 7859455042

62
Profit & Loss account of Garg Industries Ltd. ------------------- in Rs. Cr. -------------------
Mar
Mar '17
'18

12
12 mths 12 mths
mths

Income
Sales Turnover 153.91 134.16
Excise Duty 0.00 3.22
Net Sales 153.91 130.94
Other Income 0.44 1.72
Stock Adjustments 5.14 1.32
Total Income 159.49 133.98
Expenditure
Raw Materials 84.28 76.85
Power & Fuel Cost 0.00 9.66
Employee Cost 27.28 27.80
Selling and Admin Expenses 0.00 0.02
Miscellaneous Expenses 39.87 14.63
Total Expenses 151.43 128.96
Mar
Mar '17
'18

12
12 mths
mths
Operating Profit 7.62 3.30
PBDIT 8.06 5.02
Interest 4.67 4.69
PBDT 3.39 0.33
Depreciation 4.29 4.71
Profit Before Tax -0.90 -4.38
PBT (Post Extra-ord Items) -0.90 -4.38
Tax -0.14 -0.56
Reported Net Profit -0.74 -3.74
Total Value Addition 67.15 52.11
Per share data (annualised)
Shares in issue (lakhs) 145.15 145.15
Earning Per Share (Rs) -0.51 -2.57
Book Value (Rs) 22.48 22.43

63
 BALANCE SHEET AS AT 31 MARCH 2018

Liabilities Amt. Assets Amt.

Shareholder Fund 5364231022 Fixed Assets 1893341411
Loan Funds 1732223697 Investments 3843437861
Current Liabilities Deferred Tax Assets (Net) 19845655
- Liabilities 1978589143 Current Assets
- Provisions 19575007 - Inventories 805661034
- Sundry Debtors 2228592486
- Cash & Bank Balance 22134657
Loan and advances 457780835

Total Liabilities 9270793939 Total Assets 9270793939

64
 SUMMER TRAINING REPORT
ON
“EVALUATION OF FINANCIAL PERFORMANCE
OF GARG INDUSTRIES LTD.”

SUBMITTED TO :
PANJAB UNIVERSITY, CHANDIGARH
IN PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE OF
MASTER OF COMMERCE
(SESSION: 2018-2020)

SUBMITTED TO: SUBMITTED BY:

PROF. SEEMA KAPOOR JYOTI SHARMA
M.COM (2ND SEM)
ROLL NO.47924

SHREE ATAM VALLABH JAIN COLLEGE

LUDHIANA

65
 PREFACE
M.Com is a stepping stone to management career. In order to achieve practical, positive
and concrete results, the classroom learning needs to be effectively fed to realities of
situation existing outside classroom. This is practical time for management.

To develop healthy managerial and administrative skills in the potential managers it is

necessary that theoretical knowledge must be supplemented with exposure of real
environment. Actually it is very vital for the management and it is practical training that
the measuring of management it itself realized.

I took guidance under Prof. Seema Kapoor and was too fortunate to get a good exposure
in this project report an attempt has been to cover aspects.

66
 ACKNOWLEDGEMENT

Any accomplishment requires the effort of many people and this work is not different
behind this successful undertaking is the blessing and guidance of many. This formal
piece of acknowledgement may not be sufficient to express my feeling of gratitude and
deep respect that have been experienced during my learning process at Financial
Analysis of Garg Indl. Ltd. This endeavor would not have been successful without the
help and encouragement of lot of people with whom I had good fortunate of interacting
during course of journey.

I am indebted to Prof. Seema Kapoor for the knowledge and experience that I have
gained during course of training. Without his immaculate and intellectual guidance,
sustained efforts and friendly approach it would have been difficult to achieve the result
in short span of period. Not leaving behind the contribution of all the staff members for
sharing with us the wealth of their experience and knowledge.

Jyoti

67
 STUDENT DECLARATION
I hereby declare that the Project entitled “Evaluation of Financial Performance of
Garg Indl. Ltd.” submitted for the practical fulfillment of degree of Master of
Commerce of Shree Atam Vallabh Jain College, Ludhiana affiliated to Panjab University
Chandigarh is original work and not submitted for award of any other degree, fellowship
or other similar titled or Prize.

Jyoti

68
 CONTENTS
Ch. No. Topics Page No.
1. COMPANY PROFILE 1-7
1.1 Introduction
1.2 Client satisfaction
1.3 Our team
1.4 Products and services
2. FINANCIAL ANALYSIS 8-20
3. REVIEW OF LITERATURE 21-25
4. RESEARCH METHODOLOGY 26-28
5. DATA ANALYSIS AND INTERPRETATION 29-57
6. FINDINGS 58-59
7. SUGGESTIONS 60-61
BIBLIOGRAPHY 62-63
ANNEXURE 64-67

69