CONTENTS OF REPORT

1. Introduction Company History Quality Practice ISO Approval Organizational Objectives

Policies & Procedures

Competitors Products Offered List of Key Persons Administration Structure and Functions of Finance Department 2. Research Methodology Objectives of Study Sample Size Data Source Technique 3. Financial Performance Analysis of FMI Limited Ratio Analysis Financial Statement Analysis 4. 5. 6. 7. Summary & Conclusion Recommendations Limitations of Study Bibliography

COMPANY HISTORY
Ludhiana is the one of the biggest centre for production of Hosiery and Cycle Parts. Large, Medium and Small Scale Industry flourish here out of which FMI Limited is one of the Medium Scale Industry. Mr.M.M.Nayar who is the Chairman and Managing Director of the Company established this company in 1950. Mr.Nayar initiated the manufacture of Metal Wired Tape in First time in the Country. The company continues its pursuit for innovation with the introduction of product research, Spirit Level, Measuring Wheel, Telescope Measures for the First time in the country. The company was previously partnership concern but with the increasing scale and remarkable progress the company became a Public Limited Company. The Authorized Capital of the Company is 10 Lac Equity Shares of Rs.10\- each. FMI Limited with their brand FREEMANS is the largest manufactures and Exporters of Measuring Tapes. FREEMANS is the only Indian Company offering a comprehensive range of comprising various model designs in steel tape measure, Tape Rules, Fiber Glass Tapes, Metal Wired Measures, and FREEMANS also engaged in trading of Hand Tools. In 1962 Fiberglass Tape was introduced and Steel Tape Measure and Tape Rule were introduced in 1966 with American Technical know-how. Due to efficient marketing system and increasing sales the company has achieved over 70% of Indian Market Shares. Its sale for the Financial Year ending 31.03.2009 is Rs.2547 Lac. FREEMANS have both Steel and Plastic Division. Establishing a steel division gave Freemans an edge over competitors with better quality control over raw material. Freemans also has a Plastic Division with over 15 injection moulding machines manufacturing plastic components. After entering into International Market EURO FREEMANS was established in Spain in 1988. Now it has export in over 60 countries like Spain, Germany, U.K., Australia, Iran, Mexico, New Zealand, Dubai, South Africa, Argentina etc. which includes European

Companies to get ECC (European Economic Countries) which is a testimony to the fact that its Products are the best comparable to the International Quality Standards. The exports are continuous increasing by past eight years and company achieved the Exports Excellence Award by Engineering Export Promotion Council for very good performance and contribution in Exports. But in the last financial year (2009-10) companys export to Total Sale ratio decreased a little bit due to International Market Slump. During recession period by last three years, many Companies engaged in Exports lost their entity but due to very efficient Goodwill of its products FMI Limited has a very low effect on their Exports comparable to other companies of India. FMI Limited is the one company which is approved by ISO 2001:2008 certified company. Their Quality Control systems are being religiously followed to ensure Consumer Satisfaction. Precision, quality and a firm belief in perfection resulted in constant up gradation of technology.

QUALITY PRACTICE

Concept of Quality in Products: According to the concept of quality in products, these are identified and traced properly. The purpose of this is to provide the whole system for identification and traceality of products through different stages of receipts, storage processing, verification, packaging and delivery. The scope of identifying and tracing the product is at the stage of incoming, in process and at the final stage when the goods are ready. The responsibility for identifying and tracing the goods is of the Manager Production. The method of identifying and tracing the goods is that all the raw material components, customer supplied goods and bought out items are physically checked and identified by suitable means during the stages of receipt, storage, processing, packing and delivery. Traceability of products to the extent is possible and can be ensured through unique identification of critical items or batch identification for general components, related parts etc. This is how concept of quality of products is considered. Concept of Quality in Processes According to the concept of quality in process, it is done to carry out the processing operations under controlled conditions so as to ensure quality product. The scope of checking the process is during the manufacturing of all the products and also during the supply of measuring instruments. The responsibility of controlling the process is of Manager Production. The method of controlling the process starts when the delivery of products is governed by periodic planning, suitable plant machinery, support services and safe working environment. The process control parameters and products characters are mentioned closely to assure quality of deliverable goods. 4

To provide facility to the workers during the manufacturing process quality plans, flow sheets etc. are displayed and working instructions are provided for the process where in the absences of same adversely affect the quality. Records of process control, periodic maintenance and safety are properly maintained. Concept of Quality in Management and Services The purpose of quality in management and services is to identify the need for upgradation of skills and knowledge of employee and to organize the training for imparting it. The scope of training is that all employees who are directly contributing towards function are affecting the quality. Training of personnel at various levels in the organization affects the quality in management. The responsibility of identifying the training needs and its recommendation is done by the respective departmental heads. Planning, organizing and coordinating training programmers and the maintenance of training records all is done by the Management Representative. Training needs of the employee are identified by the concerned departmental heads based on the need of the organization and function performed. Also it is organized on the basic of the recommendation or approval given. A list of in house faculty members, training moulds is maintained. Also the records of training programs are maintained. Evaluation of effectiveness of training imparted may be through training certificates or on the basis on the job performance. People carrying out specific assigned task like calibration internal quality audits etc. shall be selected on the basis of training imparted to them.

ISO APPROVAL
FMI Ltd has got ISO-9001:2008 approval as their products are fulfilling al the causes to get the ISO approval. They got the ISO approval on 14th July 1999. The clauses to be fulfilled by an organization to get the ISO approval are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Management Responsibility. Quality system. Contract review. Design control. Document control. Purchasing Control of customer supplied products. Product identification and traceability. Process control. Inspection and testing. Control of inspection measuring and test equipments. Inspection and test status. Control of non conforming products. Corrective and preventive actions. Handling, packing, storage, preservation and delivery. Control of quality records like identification, collection, indexing, filing storage, maintenance and disposition of goods. Internal quality audits. Training Servicing Statistical techniques.

Total Quality Management (TQM) Total quality management means the programs designed to constantly improve the quality of products, services and marketing process. The TQM of FMI Limited covers all the following aspects: Adequacy of resources. Result of internal audits. Corrective question and complaints. Effectiveness of quality system.

The steering Committee periodically reviews the adequacy of the staffing and resources for the various Quality Assurance Activities. The result of the internal quality audits, the progress on corrective actions taken by the concerned section and failure if any are communicated to the notice of Joint Managing Director or Executive Director by the Management Representative. The progress report on the investigation carried out on the customers complaint is furnished to the Steering Committee by the Management Representative. Addition, deletion and modification if any in the various documents of the Quality System results as the outcome of the Management Review Meeting is recorded by Management Representative. Responsibility for the implementation of the decision taken in the meeting rest with Steering Committee.

ORGANIZATIONAL OBJECTIVES
The organization I working on the following objectives laid down by it. These objectives help in the working of the organization. The objectives of the organization are: To manufacture, buy, sell and deal in all kinds of precision tools and implements. To buy and sell raw material for machinery for the manufacture of precision tools and machinery. To acquire agencies for the sale of any article or commodities of local manufacturer or imported goods. To purchase and acquire patents, trademarks, manufacturing formula and secret information. To maintain the implement ISO-9002 quality system approval. To minimize rejection and work towards zero defect. To promote team work and participative culture. To get the Higher Consumer Satisfaction by best products and services.

POLICIES AND PROCEDURES

Policies: Organization basically works on their policy that: Commitment to perfection through quality and customer satisfaction. Organization policy includes objectives for quality and their commitment to quality. This organization policy is relevant to the mission and goals and also to expectation to the customers. Training is imparted continuously to understand, implement and maintain the policy of the organization. Procedures: The procedures on which the organization works are: Management Review Meeting shall be organized once in three months or earlier if the need arises. Management Review Meeting shall be convened by the Management Representative Agenda for the meeting shall be given well in advance duly approved by the Joint Managing Director or Executive Director. I. The meeting shall be chaired by the Joint Managing Director or Executive Director and attended by Steering Committee members and Management Representative. II. The result of internal quality audit, the progress on the corrective actions taken by the concerned section and the failures if any shall be communicated to the notice of the Joint Managing Director or Executive Director by the Management Representative periodically or as and when felt necessary without waiting for the convening of the Management Review Meeting. 9

III. The progress report on the investigations carried out on the customers complaint shall be furnished to the Steering Committee by the Management Representative. Management Representative shall maintain the records of the Management Review Meeting. Minutes of the meeting shall also be issued to all concerned. Responsibilities for the implementation of the decision taken in the meeting shall rest with the Steering Committee Members.

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COMPETITORS

FMI Limited is the only industry in the country. As mentioned in the Company profile that 70% shares of the Indian market are with the company which is a proof that it does not have any competitor. It is the only leading monopolistic company in the field. However, as per the information revealed from the company office bearers that there is company in China who is manufacturing products competing to it but till date their products are not as per ISO standard.

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PRODUCTS OFFERED
The unit is the production house of Different type of measuring tapes. The company currently is engaged in manufacturing of following three types of measuring tapes: 1. Metal Wired Tapes 2. Fiber Glass Tapes 3. Steel Tapes A wide range of professional long tapes model especially designed for use in building, surveying, civil engineering and allied industries. 1. Steel Tapes Steel tapes are manufactured from tampered high quality carbon steel blade, phosphated and coated with special enamel to withstand corrosion and rust. The printing is protected with wear resistant lacquer for long life. These Long Steel Tapes are available in different cases with different names and rates. The different types of steel tape measures are: (i) Steel Open Reel It consists of tough heavy duty tapes for professional on site measuring work. Its open frame allows easy maintenance and cleaning of tapes. Its long sturdy winder with easy grip knob facilitates quick rewinding.

(ii)

Steel SN and SW Series It consists of heavy duty viny leatherette covered steel case to withstand continual usage in difficult conditions. It has designed winding handle for smooth winding action. It is an ideal tape for high precision professional jobs. Thats why it has its own impact on Market and eyes of the consumer. 12

(iii)

Steel ON and OW Series It is an idle tape for contractors and surveyors where high accuracy is required. These tapes are usually used by high professionals and in special cases.

(iv)

Steel Dip Tapes These are DC and DS series. These tapes are manufactured by two types of Blades first is Carbon Steel Blade and other is Stainless Steel. Both are used for measuring depth of oil-water or soil etc. These tapes are not often used, these are the tapes for only depth measuring purpose and having very low demand in market.

2. Fibreglass Tapes: These tapes measures are made of fibre Glass yarn coated with tough plastic PVC. Unlike conventional woven or steel tape measures these are flexible yet strong and durable. These tapes have heat sealed marketing which ensure long life. In the recent few years it has observed that company is moving into Fibre glass tapes from Metal Wired Tapes and demand of the same tapes is rising continuously. The different types of glass tapes are: (i) Fibre Glass FN and FW SeriesThese tapes are made of tough viny leatherette covered steel case to withstand difficult conditions. It is a durable tape with winding mechanism which ensures long trouble free usage. (ii) Fibra FB SeriesIt is a tape with tough yet light weight ABS case ribs for easy handling and strong grip. It is used for heavy duty winding mechanism. (iii) Topline FT Series It is a tape with tough yet weight ABS case reinforced with metal for extra strength. It is used for heavy duty winding mechanism. 13

(iv)

Fibre Glass Open Reel This tape is of FO Series. It is an ideal deal tape for contractors and surveyors. Its design allows an easy cleaning of tape. It is a long winder with easy grip facilitates quick rewinding. Its protruding market at the bottom of the case allows easy measurement of land.

(3) Metal Wired Tapes: It is a general purpose tape woven to width with copper wires lengthwise for additional strength coated with special paints for protection against moisture, wear and tear. This tape needs most care and time to manufacture and need more manpower than any others. It has also low demand in the market than of other manufactured. Different types of metal wired tapes are:(i) Metal Wired This tape is of MW Series. It has impact resistant viny leatherette covered case for use in taxing condition. It needs very care while production. (ii) Top Line It is a tough yet weight ABS case reinforced with metal for extra strength. It is used for heavy duty winding mechanism. (4) Pocket Tapes This tape is of Steel series but in the steel series but in this category tapes are available into only 1 meter to 10 meters (1, 2, 3, 5, 10 meters). 3 Meter Pocket tapes are manufactured in large quantity. These tapes are manufactured in various cases and are given different names like Centigraff, Basik, Levo, Zeon, and recently introduced IKON and STAREX, available with Lock and Clip. Lock works as stopper on the tape and Clip is to hang it with the belt for convenience of the user. Pocket tapes have more demand in the national market than of International.

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The Company is also manufacturing the following items: 1. 2. 3. 4. 5. Stainless Steel Rules Cutters Torpedo Levels Trapezoidal Levels Measuring Wheels

Besides this all above The Company is also trading of many kinds of Hand Tools. These Hand Tools are also for the measuring instruments or components for the same. Trading of tools is mainly done with the other countries. The company is making continue efforts to improve the existing quality and to introduce new products which are required in Global Market. In this connection this is also worthy here to explain here that 2 types of Pocket tapes are also registered under trade mark during this financial year.

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LIST OF KEY PERSONS

BOARD OF DIRECTORS: Sr. No. 1. 2. 3. 4. 5. Name of Director Mr. M.M.Nayar Mr. Rakesh Nayar Mr. Ajay Nayar Mrs. Ravinder Nayar Mrs. Cherene Nayar Designations Chairman & Managing Director Joint Managing Director Executive Director Director Director

SHAREHOLDERS: Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Name of Shareholder Mr.M.M.Nayar Mr.M.M.Nayar(HUF) Mr.Rakesh Nayar Mr.Ajay Nayar Mrs.Ravinder Nayar Mrs.Cherene Nayar Mrs.Gauri Nayar Mr.Sahil Nayar Mr.Shashi Pal Jain Percentage of Holdings 29.91% 00.06% 25.90% 30.89% 00.13% 04.44% 03.20% 04.27% 01.21%

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LIST OF TOP EXECUTIVES: Sr. No. Name of Executive 1. Mr. Shashi Pal Jain 2. Mr. Jatinder Chugh 3. Mr. Shakti Raj Jain 4. Mr. Shiv Jindal 5. Mr. Yash Pal Marwaha 6. Mr. Amar Singh Rana Designation General Manager Finance Manager Production Manager Export Manager Import Manager Quality Assurance /Control Manager

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HEADS OF DIFFERENT DEPARTMENTS:

Departments 1. Accounts Name of H.O.D. Mr. Parveen Kapoor Mr. Rajesh Verma Mr. Jarnail Singh Mr. Om Parkash Chaudhary Mr. Ashwani Sharma Mr. Pawan Mr.Madan Mr. Rashpal Mr. Rakesh Nanda Mr. Devi Ram

2.

Exports

3.

Store (Raw Material)

4.

Store (Packing & Own Manufacture Components) Personnel Security

5. 6.

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FMI LIMITED
ADMINISTRATION DEPARTMENT Chairman & Managing Director Joint Managing Director Executive Director General Manager

Manager Finance

Manager Production

Manager Exports

Manager Quality

Managemnet Representative

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FUNCTIONING OF ADMINISTRATIVE

Administration Department is controlled by the Chairman and Managing Director. Authorities and responsibilities of all the heads of the different departments and individual are made by this department. The authorities and responsibilities are as follow:-

Chairman and Managing Director 1. 2. 3. 4. 5. 6. 7. 8. 9. Overall supervision and control of all operation of the company. Implementation of the quality system. To ensure availability of resources in terms of machines, manpower and capital. Defining responsibilities and authorities of all directors. Appointment of Management Representative. Market development of the product. To maintain discipline, reduce absenteeism, to ensure smooth and congenial atmosphere in the organization as a whole. Human resources development and general administration. Decision making at Top Level.

Joint Managing Director

1. Implementation of Quality System. 2. To assist the CMD in production related activities. 3. Top level negotiation with Bank and financial institution. 4. To look after imports as well as exports. 5. To deal with all legal matters. 6. To assist the CMD in general administration. 7. To approve quality manual and procedure manual. 8. To assist CMD in identifying further investment opportunity. 20

9. To maintain optimum inventory levels. 10. To take corrective and preventive action on non- conforming products. 11. Identifying training needs of personnel and organizing training of personnel I consultation of Management Representative. Executive Director 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. To look after International Markets and develop new markets globally. To arrange and monitor review of contracts. To ensure proper progress and completion of all projects. To look into new products development. To look after all purchase related activities. To look after sales promotion. Implementation of Quality System Standards. Issuing authority for Quality Manual and Procedure Manual. To ensure availability of raw material. To ensure quality of finished products as per customer specifications. Defining the responsibilities and authorities of all managers. Ensuring implementation of corrective and preventive action decisions.

General Manager 1. 2. 3. 4. 5. 6. 7. 8. 9. To look after all taxation related matters. To assist the CMD with regards to financing pattern and location of projects. To look after all accounts related matters. To assist the CMD in general administration. To assist the Directors in overall operations. Implementation of Quality System. To maintain quality records in this area. To look after legal matters with all legal departments. To look after all banking transactions.

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Manager Finance 1. 2. 3. 4. To arrange finance for the company. To look after the accounting matters, income and excise matters. To deal with bank, income tax, excise and sales tax department. To assist Management Representative in implanting relating to ISO 9002 and maintenance and updation of records. Manager Production 1. 2. 3. 4. 5. 6. 7. 8. To look after all the production related activities. To ensure proper testing of raw material in process inspection at various stages of production and final inspection. To ensure quality of finished products as per customer satisfaction. To ensure proper maintenance of all machines and equipments. To assist the Executive Director in production planning. To assist the JMD in maintaining optimum inventory levels. To ensure maintenance of quality records. To make continuous efforts for the betterment of production process.

Manager Export 1. 2. 3. 4. 5. To assist the Directors in export planning. To assist the Directors in export promotion. To maintain quality records in his area. To assist the Directors in making export delivery schedules. To maintain all export related documents.

Manager Quality Approval 1. To ensure proper inspection and testing of material at all stages. 22

2. 3. 4.

To ensure proper maintenance of inspection records. To approve deviation. To make efforts to improve and maintain quality of products.

Management Representative Executive director has been appointed as Management Representative. In addition to his regular responsibilities the MR shall have to do as follows: 1. 2. 3. 4. 5. Initiate and implement Internal and External Audits. Conduct Management Review Meeting periodically. To make sure Quality Manual including amendments. Co-ordination with Certification Body. Reporting on the performance of the Quality Assurance System to the Management for review and subsequent improvement of the quality system.

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FUNCTIONS OF FINANCE DEPARTMENT

The Finance Department of the FMI Limited has its own strength. It consists of very mindful and intelligent and educated persons on the Top level and very hard working employees on the middle and low level. Mr.Shashi Pal Jain is the Head of the Department as he has full control over Finance and all matters related to finance of the company. Finance Department of the company can be defined as under:

General Manager

Finance Manager

Senior Accounts Officers

Senior Accounts Officer

Senior Billing Officer

1. Assistant Accounts Officer 2. Assistant Accounts Officer 3. Assistant Accounts Officer

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Functions of the Department

General Manager:-

a. b. c. d. e. f. g.

He looks after all the taxation related matters. He assists CMD with regards to financing pattern and location of projects. He looks after all accounts related matters. He assists the CMD in general administration. He also looks into the company law matters. He deals with all the Banks and other Financial Institutions. He deals with all Corporate Law Obligations.

Finance Manager:a. b. c. d. He assists the General Manager in taxation related matters. He assists the General Manager in all accounts related activities. He assists General Manager in fulfilling company law matters. He looks after the Finalization of the Balance Sheet and Audit Reports etc as mandatory by Company Law. Accounts Officers and Billing Officer:a. b. c. d. e. He looks after the sales tax matters and deals with the sales tax department. He looks after the excise obligation and deals with the excise department. He deals with daily Routine accounting as per accounting standards prepared by Chartered Accountants. Ledger Scrutiny is another function of the Him. Preparing and keeping record of Sale Invoices and deals with Customers.

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f. purpose.

Deals with Customers and have control over Customer ledger for payments

Assistant Accounts Officers:a. b. c. d. e. He handles cash and assist senior accounts officer in account related activities. He assists senior accounts officers in fulfilling excise obligation and account related activities. He Assist the Finance Manager in Finalizing Balance Sheet. He does the book Keeping and recording all the transactions. He assists the Accounts Officers for maintaining the records and fulfilling the obligations forced by various legal departments likewise Weights & Measure Act, Income Tax Act, and Indirect Taxation etc.

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RESEARCH METHODOLOGY Objective of Study: The main purpose of the study is the fulfillment of the requirement of the syllabus of Post Graduation Degree of Master of Commerce. Under the training we have to get the knowledge about the practical aspect of accounting. This Report is the Result of my Five week of Summer Training in FMI LIMITED Industry, Doraha. Summer training is the integral part of MBA course and efficient utilization of material, time and resource are very much important for successful completion of any task. FMI Limited provide different concerns with FMI Limited help me to create confidence regarding approval of Subject matter. In my research I was to study about the Financial Position and Procedures of FMI Limited. To carry on the study the student have been deputed in leading corporate unit to be in touch with practical aspect and to apply the theoretical knowledge imparted in real life situation. This Project Report will give a vide coverage of practical experience of training. Sample Size: We have considered only one firm so sample size is very small. This entire project is based on the information available of FMI Limited.

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Data Source: Data is collected and arranged in the prescribed manner from the Financial Statements of the concern. Some old reports of the same unit were also a little bit helpful for this task. All other information required to complete the project was collected verbally from the Senior Authorities likewise General Manager and Finance Manager of the Concern. Technique: We have used composites of many techniques to rearrange the data collected into the productive figures. That all are defined as under: 1. 2. 3. Ratio Analysis Bar Diagrams Charts of Comparison

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Financial Performance of FMI Limited

Meaning and Importance of Ratio Analysis: Before going through the Ratio analysis of the Company to know the actual position of Financial Condition and efficiency in the affairs of the concern we should first of all consider the meaning and importance of the Ratio and Ratio Analysis. So we are firstly going through the meaning and importance of Ratio which helps us to make us able to study and understand the condition of concern. A ratio is the arithmetic expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. According to accountant handbook by wixon a ratio is an expression of the quantitative relationship between two numbers. According to Kohler a ratio is the relation of the amount, A to another, B express of the ratio A to B. In simple language ration is the one number express in the term of other and can be worked out by dividing one number into the other. For example the Current Assets of the Firm are Rs.5 Lac and Current Liabilities are Rs.2.5 Lac. The ratio of Current assets to current liabilities is 2. Such type of ratio is called Simple Ratio. 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. As in the above ratio example the ratio is 2 x 100 or 200% or says Current Assets are 200% of the Current Liabilities. The Ratio Analysis is also very important tool of financial analysis of the company. It is used as Device to analysis and interpret he financial health of enterprises. Just like a doctor examining his patient by recording his body temperature, blood pressure etc before making 29

conclusion regarding the illness and before giving his treatment. A financial analyst analyses the financial data with various tools of analysis before commenting upon the financial health of an enterprise. The ratio is known as a symptom like blood pressure, the pulse rate, temperature of an individual. 1. Decision Making: Financial Statements are prepared for decision making. Ratio analysis help in making decision from the information provided in these financial statements. 2. Financial Forecasting: Ratio analysis is of much help in financial forecasting and planning. Planning is looking ahead and a ratio calculated for a number of years work as a guide for the future. 3. 4. 5. Communication: The financial strength and weakness of a firm are communicated in a more easy and understandable manner by the use of Ratios. Co-Ordination: Ratio even helps in co ordination which is almost important in effective business management. Control: Ratio analysis helps in making effective control of the business. Standard Ratio can be based upon financial statements and variance if any can be found by comparing actual with standard. So as to take a corrective at the right time. 6. 7. For Shareholders: Investors in the company will like to assess the position of the concern where he is going to invest. For Creditors: A creditor extends short term credit to the concern. They are interested to know whether financial position of the concern warrants their payment at a specified time or not. Current and Acid Test Ratio will give an idea about the current position of the concern. 8. Employees: The employees are interested in the financial position of the concern specially profitability. The wages increases and amount fringe benefit are related to the volume of profit earned by the concern. The employees make use of information available in financial statements. 9. Utility to Government: Government is interested o know the overall strength of the industry. Various financial statements published by the industrial units are used to calculate the ratio for determining short term and long term and overall financial position of the concern. Government may base future policy on the basis 30

of industrial information available from various units. The ratio may be as a indicator of overall financial strength of the public and private sector also. 10. Tax Audit Requirements: Section 44 AB was inserted in the income tax by the finance act,1984. Under this section every assessee engaged in any business have turnover exceeding 40 Lac is required to get the account Audit by the Chartered Accountants and submit the tax report to the income tax department. According to the Clause 32 of the income tax require that following accounting ratio should be given: (i) (ii) (iii) (iv) Gross Turnover Ratio Net Profit Ratio Stock in Trade Turnover Ratio Material Consumed Ratio

Further it is also advisable to compare the accounting ratio for the current year with the earlier two years. So that the auditors can make necessary enquiry, if there is any major variation in accounting ratio. So from the above all discussion it is made sure that a companys financial position can be well judged by the ratio analysis. So going through the Financial Statements of FMI Limited I have prepared a brief summary of the financial condition of the Concern. Ratio analysis of the concern is made with the help of the senior staff and executives engaged in the finance and the accounts of the concern. The ratio analysis of the FMI Limited is done very carefully and summarized as under: Ratio Analysis

Balance Sheet Ratio 1) Current Ratio 2) Quick Ratio 3) Absolute Ratio Ratio

Profit & Loss Ratio 1) Gross Profit Ratio 2) Operating Ratio 3) Net Profit Ratio

Mixed Ratio 1) Debtor Turnover Ratio 2) Payable t/o Ratio 3) F.Assests t/o

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4) Debt Equity Ratio Ratio 5) Proprietary Ratio Fund 6) Capital Gearing Ratio 7) Inventory Turnover Ratio Ratio 8) Ratio of Current Assets T/Assets to Fixed Assets Ratio

4) Cash Profit Ratio

4) Ret/on Equity

5) Expense Ratio

5) Ret/on S/hlder

6) Capital t/o Ratio 7) W/Capital t/o

8)

Return on

Balance Sheet Ratio: Balance sheet ratios are that ratios that are determined from the balance sheet of the company. As we all know Balance Sheet is the financial statement of company that tells us about the financial condition of the concern on a specific date. Financial Statements are the end product of the accounting transaction. So many ratios are calculated from the balance sheet figures that tells the financial strength and weakness of the concern. As I gone through the Balance Sheet figures of FMI Limited for the financial year ending 31.03.2010, I reached on the following results by the ratios analysis. 1) Current Ratio: The current ratio represents the current financial position of the concern, means it is the ratio that tells us about the short term financial condition of the concern. It is calculated by applying the following formula: Current Assets Current Ratio = -------------------Current Liabilities 74703922 = ---------------50201102

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= 1.49 Times So from the above calculation it is clear that FMI Limited has very good command over its current assets over current liabilities. It is required to maintain this Ratio above than 1.00 times minimum for the effective management of the current affairs of the company. So Company has a very good control on the Current position of its affairs. Note: The Company is constructing a Multiplex Mall (Silver Arc Mall), It is added in Inventories Head in the Current Assets Group in the Balance Sheet. In the same manner Company has got advance against the Lease Holders and Purchasers of Space in the same Mall, all this amount is grouped under Current Liabilities. Both the figures are subtracted from Total as per Balance Sheet to get Actual Condition of FMI Limited. 2) Quick Acid Test Ratio: The Quick Acid Test Ratio represents the current very liquid

financial position of the concern. It is calculated by applying the following formula: Current Quick Assets Quick ACID Test Ratio = -------------------------Current Liabilities 32860208 = -------------50201102 = 0.65 Times

So as above calculated ACID Test Ratio shows that FMI Limited has 65% very Quick Liquid Current Assets of the Total Current Liabilities. So it is clear that FMI has good collection of Very Quick Liquid Assets that can are convertible into Cash in very short period. So Liquidity Position of the Concern is very Strong.

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3)

Cash Ratio: Cash Ratio of the concern represents the cash balances available in the

companys hand for the fulfillment of the Current Liabilities due to Company. It is calculated from the following formula: Cash & Bank Balances Current Ratio = ----------------------------Current Liabilities 2511288 = ------------50201102 = 0.05 Times So from the above it is cleared that company maintains very short cash balance in hand and at Bank. Company has very low cash and bank balance in hand to repay the current liabilities. The company is having the mostly current assets in the form of Debtors and Loans & Advances other than Cash. Thats why Company has very low Cash Ratio to the Current Liabilities.

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4)

Debt Equity Ratio: Debt equity ratio is the ratio of Outsider liabilities to the

Shareholder fund. It tells to the how much extent Company depends on the outsider fund. The Ratio is calculated as under: Outsider Funds Debt Equity Ratio = ---------------------Shareholder Funds

141189158 = -------------87972390 = 1.60 Times It can be noted from the above Ratio that Company has maintained the outside loans including secured or unsecured both too much comparable to the Shareholders Fund invested into the company. Company has maintained very low Paid up capital to maintain the hold of management and to get the decision making powers in less hands.

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5)

Proprietary Ratio: Proprietary ratio is used to get the knowledge about the

Shareholders fund to Net Total Assets. Total Assets invested are checked by his ratio that in how much extent investment is done by the shareholder fund. It is calculated as under:

Shareholder Fund Proprietary Ratio = ---------------------Net Total Asset 87972390 = ------------386223306 = 0.23 Times So it is very much cleared from the above ratio that company has a very strong and brave management that has obtained most of the funds from out sources. Management has mostly dependent on the out sources of finance. Management keep a very low risk on the shareholders funds. It is done for the two main reasons- First is company does not want to share the holding of command with others as management will be in less hands, and the second is to minimize the risk of investment. But it is also seen that company has very effective management over its finance and a proper control over out sources of finance. 36

6)

Inventory Turnover Ratio: Inventory turnover Ratio represents the time period of

movement of inventory into finished products for Sale. In other words it can be said that in how much times of sales value the company keeps a Average stock of Raw Material. It can be calculated by applying the following formula:

Net Sales 1.) Inventory Turnover Ratio = -------------------Average Inventory 307952009 = ---------------30360574 = 10.14 Times

Total Days in Year 2.) Inventory Conversion Period = ------------------------Inventory T/o Ratio 37

365 = -------10.14 = 36 Days So from the above it is calculated that the company maintains the 10% of average stock (Raw Material) in stock of total Net Sales Value. In the other words it can be said that the company keeps average 36 days raw material consumption as stock at every time. So company is much conscious about the stock balancing. I got the answer after asking to management that the finished products e.g. Measuring Tapes requires many type of small components, so company has to stock every component for some spare time. Second factor is that the Main Raw Material e.g. Carbon Steel Strip is imported, So Company has to maintain stock more than the Critical level. Even after going through the Inventory Study in depth I came at the conclusion that Company holds very efficient control over its Inventories. Note: Average inventory is calculated by two ways- First by dividing the month ending inventory value with number of months of the period for which the calculations are being done, and the second is to add Opening and Closing inventory stock and then divide with 2. In the Balance sheet we can not have the month end inventory so that I am using the second method e.g.: Opening Inventory + Closing Inventory Average Inventory = -----------------------------------------------2

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7)

Ratio to Current Assets to Fixed Assets: This ratio is calculated to know the current

liquidity percentage over the long term liquidity or assets. It is calculated as under: Current Assets Ratio to C/A to F/A = -------------------Fixed Assets 747403922 = --------------108290304 = 0.69 Times

So current assets of the company are also having a very good percentage over long term assets. It can be said that the company have very sufficient current position of finance. Company is maintaining the long term fixed assets as well as the short term current assets into very efficient manner so that the production and operations can not be interrupt at any stage by any reason.

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Profit and Loss Ratios: Profit & Loss ratios are calculated from the profit and loss
account of the company. Like Balance Sheet Profit and Loss Account is also Financial Statement of the concern. The profit and loss account tells the financial profitability or loss of the affairs of the company for a specific period of time, generally a financial year. Profit and loss ratios are the ratios that deals with the mostly profitability of the concern o know the results. These ratios are having very effect on the mind of the third parties. Many persons are interested in the Profitability ratios of the company likewise- Employees, Management, Taxation Departments, Government, Investors, Shareholders, Creditors etc. By going through the Profitability of the FMI Limited I got the following ratios: 1) Gross Profit Ratio: Total Direct Expenses that are directly related to the production

and manufacturing are deducted from the Gross total incomes of the concern to obtain the Gross Profit of the concern. This Gross Profit is divided by the Total Sales of the concern to get the Gross Profit Ratio. The calculation is done as under: Gross Profit of concern Gross Profit Ratio = ------------------------------ X 100 Net total Sales 114866100 = ---------------- X 100 307952009 = 37.30% 40

So from the above it can be said that the company has very good Gross Profit Ratio over its Sales Value. It is due to the Firstly Efficient Management and second factor is the monopoly over measuring tapes manufacturing. The company enjoys the benefits of monopoly market. No hard competition is faced by company.

2)

Net Profit Ratio: All the left Indirect Expenses are also deducted from the Gross

Profit and all the Indirect Incomes are added to the Gross Profit to obtain the Net Profit. All the expenses that are deducted should be deductible under Companies Act and Income Tax Act. Net Profit is then divided by the total sales to get the Net Profit Ratio. The Calculation is done as under: Net Profit/Loss Net Profit/Loss Ratio = ------------------- X 100 Net Sales 22816658 Net Profit Ratio = --------------- X 100 307952009 Net Profit Ratio = 7.41 %

Net Profit if the concern is not very high. This is due to the unexpected demand of Legal Metrology Department of Punjab under Weights & Measure Charges of Measuring Tapes paid. Aforesaid department of Punjab in 2008-09 for Rs.573 Lac out of which Rs.300 Lac was paid in the same year and balances 273 Lac is paid in the year 2009-10. That is why after adjusting the same companys actual profit decreased.

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3)

Cash Profit Ratio: Net profit is calculated by accrual basis of every expense even

after deducting the Depreciation, Expenses to the extent not written off, Preliminary Expenses not written off, Pre-Operative Expenses not written off, But These Expenses are not actual expense that a concern has to pay to anybody. It is the amount by which the assets are deducted by its Original value. So Net Cash Profit is calculated by adding these expenses that company has not paid in cash in the relevant year. These expenses are being paid in the previous years but are claimed as expenditure in the subsequent financial years as per the provisions of Company Act, 1956 into the Net Profit and deduct these from the Net Loss. Cash Profit is also divided by the Net Sales of the concern. Calculation is as under for the Cash Profit Ratio:

Cash Profit/Loss Cash Profit/Loss Ratio = --------------------- X 100 Net Sales

30362610 Net Cash Profit Ratio = --------------- X 100 307952009 Net Cash Profit Ratio = 9.86 %

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So from the above ratio it is clear that the company is having great amount of its Fixed Assets on which Depreciation is claimed and Pre-Operative and Preliminary Expenses adjusted in the profit. Here is difference between Net Profit and Cash Profit that comes to the financial figure of Rs.75,45,952/4) Expense Ratio: Every company engaged in any business have to bear some kind of

expenses. Expenses are the main part of the Cost of goods sold or services rendered. Nature of expenses are different at every different kind of business. Expense ratio of the concern is calculated by dividing all the expenses incurred by the concern by Sales amount. Calculation for he same ratio is as under: All Expenses Expense Ratio = ----------------- X 100 Net Sales

137622653 = --------------- X 100 307952009 = 44.69 % So from the above ratio it is clear that FMI Limited has to bear a huge amount on the expenses other than Raw Material Consumed. Except Raw Material Consumed Expenses incurred by FMI Limited are at very high rate. 44.69% Share of the total sales is expense on the expenses other than of Raw Material.

Mix Ratios: Mix ratios are the ratios that are abstract from both Balance Sheet and Profit and Loss Account. These ratios are for the fulfillment of the need of Management. Internal 43

Management needs these ratios for decision making at various levels. There are many kinds of ratios that are grouped under this head. But most common used ratios are calculated as under:

1)

Debtor Turnover Ratio: This ratio tells us about the proportion of Debtors in the

Net Sales of the concern. This ratio is calculated to help the internal management to taking various decisions at Top and Middle level. This is calculated as under: Net Sales 1.) Debtor Turnover Ratio = ----------------Avg. Debtors 307952009 = ---------------22581550 = 13.64 Times

Total Days in Year 2.) Debtor Conversion Period = ------------------------Debtor T/o Ratio 365 = -------13.64 = 40 Days So from the above it is made very clear that company has very good period of recovery of debt from Debtors e.g. 40 days. Total revenue of FMI also includes the Export Sale to very much extent as well as the Home country sale. So foreign and local debtors are recovered at 44

an average period of 40 days against sale made to them, which is very good and efficient thing. As per the current strategy company is getting advance payment against sales from home country dealers and customers. So average 40 days to recover the debt are reasonable and this is also expected to decrease this conversion period in near future.

2)

Fixed Assets Turnover Ratio: This ratio tells us about the Money of Shareholders is

in how much extent invested in the Fixed Assets of the Company. This ratio is the calculation that provides the figure of percentage of shareholders investment in Fixed or can say Long Term Investment by Company. This ratio is calculated to take the decision if the management of the company thinks that long term fixed assets should be introduced and company has no resources for this investment and Share Capital is still not issued to the extent of Authorized Limit. Then in this condition if company has low Fixed Asset Turnover Ration then it may make issue of Capital or make an call to existing shareholders if Capital is still not fully paid up. This is calculated as under:

Fixed Assets Fixed Assets Turnover Ratio = ---------------------Shareholder Fund 108290304 = --------------87972390 = 1.23 Times Shareholders fund includes the Reserve and Surplus amount earned by company in the past years. So 1.23 Times of Fixed Assets Turnover Ratio is very good for a company. It tells that the company has very sound out sources of funds instead of shareholders fund. Companys Authorised Capital is very huge comparable to Called up and paid up capital. So in future if there seems the emergency need of funds for expansion company can raise the requisite 45

amount by issue the share capital. So in short company is maintaining good Fixed Asset Turnover Ratio.

3)

Funded Debt to Capitalization Ratio: This ratio tells us about the proportion of

Long Term Debt to the total Capitalization by company. This ratio tells the dependability of out sources on the total capitalization of the company. The calculation is done as under: Long Term Debt Funded Debt to Capitalization Ratio = ------------------------- X 100 Total Capitalization

141189158 = --------------- X 100 243298768 = 58.03 % This is also to test the dependability or participation of out sources of finance in the total capitalization of the company. So the key figure tells that the company depends more than 58% of total wealth is owe to the out sources of finance. So company has great goodwill in the books of financial institutions/ Banks. So companys management is very conscious about the wealth and sources of finance of the company. So Companys funded Debt to total Capitalization ratio is also in the favour of company and companys management.

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Financial Statement Analysis for the year ending 31.03.2010:

Financial Statements are the end product and the result of the affairs of the company for a specific period. Financial Statements are very important for every concern to know the results of the affairs of company for a specific period e.g. one financial year generally. Financial Statements are needed at every level of financial operations and dealing of concern. Importance of financial Statements can be judged from the users of it. The main users of Financial Statements are as under: 1. 2. 3. 4. 5. 6. 7.
8.

Government Legal Departments Financial Institutions/Banks Money Suppliers Management Employees Suppliers and Debtors Research Centers etc.

By making analysis of the financial statements we can judge the profitability and stability of the companys financial and growing conditions. It is done mostly at internal level of management. So we are here going through the Financial Statements of the FMI Limited e.g. Balance Sheet and Profit and Loss account for the year ending 31.03.2010 to know the actual financial position of FMI Limited.
47

1. Profit and Loss Account Analysis

Profit and loss account of FMI Limited shows that company is getting very good profit over its sales. Companys Sales for the year 2009-10 is Rs.3080 Lac (App.) which is more than of last year by Rs.533 Lac and the profit and loss account shows that company earned a profit of Rs.228 Lac(PAD) and Rs.155 Lac(PAT) in the same year though there was a unexpected demand from Legal Metrology Department of Punjab against Weights & Measure Charges of Measuring Tapes Manufactured during the period of 2003-04 to 2005-06 of Rs.573 Lac out of which Company had to pay Rs.300 Lac in the same financial year e.g. 2008-09 UNDER PROTEST as the first installment and remaining Rs.273 Lac is paid in this financial year e.g. 2009-10. The Legal Metrology Department of Punjab Government demanded the same amount against the year 2003-04 to 2006-07 as per Weights and Measure Act,1986 for Stamping fee of Measuring Tapes manufactured and supplied by the companies into Punjab and other states of India. Company has challenged the same demand and the Case is lying against the Secretary of Punjab. The department forced the company to pay the amount of demand. Even manufacturing License of Measuring Tapes was suspended for a short period. So the company had to arrange the amount demanded by department as Under Protest payment. Company has to accept Corporate Loan for the same amount e.g. Rs.300 Lac in 2008-09.

48

Thats why the Amount of Administrative Charges is Rs.413 Lac that was Rs.428 Lac in the previous year. This amount includes the Payment of Rs.273 Lac of the same nature. This amount is fully deductible under Income Tax Laws because department mentioned the purpose of the fees as Stamping Fee of Tapes. Other all Expenses are almost same in proportion as in the previous year. The company had to face the loss in 2008-09 only due to the Under Protest Payment to Legal Metrology Department against the same demand.

Comparative Profit & Loss Account for last three years Particulars 2009-10
(In Lac)

2008-09
(In Lac)

2007-08
(In Lac)

Total Sales & Other Incomes Raw Material Consumed All Expenses

3099.44 1419.59 1451.69

2646.30 1332.92 1414.34

2179.94 1137.75 971.88

Total Expenses

2871.28 228.16

2747.26 -100.96

2109.63 70.31

Net Profit\Loss
Taxation Provisions

72.68

4.21

21.65

Net Profit for Appropriation

155.48

-105.17

48.66

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The above figures can also be expressed in the Chart. With the help of charts we can clearly compare the figures in a very easy way. So here below is the chart of the above comparison:

C o m p a ris o n o f S a le s & B r e a k u p o f E x p e n s e s in to R a w M a te ria l a n d O h e r A ll E x p e n s e s

3500 3000 2500 2000 1500 1000 500 0 2 0 0 9 -1 0 2 0 0 8 -0 9 2 0 0 7 -0 8 F in a n c ia l Y e a rs

To t a l S a le s & O t h e r In c o m e s R a w M a t e ria l C o n s u m e d A ll E x p e n s e s

From the study of the financial reports of the company for many previous years it is clear that the company is getting a very good profit over the last many financial years. The sale of the company is continuous increasing. Company is going through various kinds of Cost Cutting programs by internal management
50

Values in Lac

and as a result company could manage to decrease its raw material cost percentage over its sales. Company put a check on the unnecessary expenses and avoid/eliminate/reduce the expenses without of such expenses process can be run smoothly. That is why the company is getting sales at high degree but expenses are not rise in the proportion of sales these are less than of in the previous years.

Raw Material Cost: Raw Material Cost is reduced because of the consciousness of the internal management and various process of manufacturing have been changed or modified. Demand for Product has also increased as Quality is the main goal of FMI Limited. So Production is increasing but cost of production is increasing in the less proportion of total cost. This can be seen from the following comparison of total production/ raw material cost to total sales:

Raw Material Cost Raw Material Proportion = ----------------------Net Sales

In 2009-10 1419.59 = ----------3099.44 In 2008-09 1332.92 = -----------2646.30 In 2007-08 1137.75 = -----------2179.94

Raw Material Cost over Sales Value

= 45.80%

= 50.37%

= 52.19%

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So it is clear from the above that the Raw Material Cost is going down and this resulted to get higher profit over its sales and operations. Every manufacturing unit can only be surviving if the production cost is in control of management. So FMI Limited is taking full control over its production cost from last some years and it is also the aim of management to get it lower than of present without having any effect on quality of product manufactured. So it is also estimated that company will be in great profit in near future if the cost of raw material/production cost of tapes will be lower.

All Expenses Cost: All expenses are done to run the production, distribution of finished goods smoothly. All expenses include the Manufacturing Expenses, Administration Expenses, Legal Expenses, Financial Expenses, Selling Expenses and Depreciation on Fixed Assets charged. So these are the expenses that every company has to pay to run the production process smoothly and all expenses figure of FMI Limited shows that these expenses are also reduced from recent some years. In fact the sales have been increased of company but the expenses proportion is decreasing. This is also done with the same efforts of Management. Wastages have been eliminated in manufacturing processes and unnecessary expenses are being avoided. Expenses can be clearly understood with following ratio analysis of three years:

All Expenses Cost

52

All Expenses Proportion = ----------------------Net Sales

In 2009-10 1451.69 = ----------3099.44

In 2008-09 1414.34 = -----------2646.30

In 2007-08 971.88 = -----------2179.94

Raw Material Cost over Sales Value

= 46.84%

= 53.45%

= 44.58%

Profitability Comparison: Profitability of the concern is very efficient from last some years. Figures shows that Company earned Rs.70.31 Lac in 2007-08, incurred a loss of Rs.100.96 Lac in 2008-09, Rs.228.16 Lac in 2009-10 and gained Rs.228.16 Lac in 2009-10 as net profit. Very actual condition of the concern tells that company is in a very good position and earning a continue increasing profits. But the demand of Legal Metrology Department pushed FMI Limited to face loss in 2008-09 but however company managed to get rid off the effect of loss in 2009-10 after making payment of 273 Lac against the same mentioned demand. So it can be judged from the profitability of the concern
53

that company is getting very good profits over its sales from last some years and as per management of company profits will be increased in future by increasing sales and decreasing cost of material and other expenses. Profit chart is shown as below:

P rofitability C omparison of FMI Lim ited

250 200 Profit/Loss in Lac 150 100 50 0 -50 -100 -150 Fina ncia l Ye a r 2009-10 2008-09 2007-08 Net P rofit & Loss

So from the above it is clear that the net results of the affairs of company is very satisfactory from last some years. It is also expected that company will give more effective results in coming years with the efficient management control over its all operations.

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2. Balance Sheet Analysis

Comparative Balance Sheet for last three years Particulars
Shareholders Fund --Paid Up Capital --Reserves & Surplus Loan Funds --Secured Loans --Unsecured Loans Deferred Tax Liability(Net) 1143.89 268.01 141.37 1105.97 246.67 124.23 717.50 241.32 124.26 18.05 861.67 18.05 733.66 18.05 839.74

2009-10
(In Lac)

2008-09
(In Lac)

2007-08
(In Lac)

2432.99

2228.59

1940.86

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Net Fixed Assets Investments Current Assets --Inventories --Sundry Debtors --Cash & Bank Balances --Loans & Advances Less : Current Liabilities --Liabilities --Provisions

1082.90 3.48

1096.36 1.85

1097.33 1.85

2332.30 236.19 25.11 182.25

1777.72 215.45 15.74 201.12

1019.75 340.85 21.95 79.64

-1299.48 -129.76

-968.43 -111.22

-591.89 -33.12

2432.99

1940.86

1891.24

Balance Sheet of the FMI Limited shows that company is in a good financial position so that company has earned a Reserves and Surplus amount of Rs.861.67 Lac that is huge. The Paid up Capital of Company is 18.05 Lac only so it can be judged that company is managing out sources fund most for its operations of long term as well as short term. Secured Loans are the term loans for constructing the Multiplex at Ferozepore Road, Ludhiana and also a corporate loan of Rs.240 Lac which was accepted for the payment of demand of Legal Metrology Department in 2008-09. No additional any loan is accepted during the year. In unsecured loans no any loan is accepted in the financial year 2009-10. Net fixed assets are almost like same as were in last year. Additions to Fixed Assets are almost equivalent to the Depreciation amount claimed by company on the gross block of company. Investments are increased by 1.68 Lac which represents the purchase of Gold coins as investment for the future. Debtors, Bank Balances and Cash are the assets that are always having
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fluctuations but there are not too much up and downs noted in the last three comparable financial years. So from the above comparison it is clear that FMI Limited is at good position in its Finance. Company is earning good profit and having very good command over its assets and liabilities. Management of the company is very strong and effective.

SUMMARY AND CONCLUSIONS

After I have gone through the data of the FMI Limited in the prescribed manner to reach at the result about the financial condition of the concern I have realized from my analysis that the company is having very strong policies about the finance of the company. Company is having very good control over its financial affairs. Financial Strategies are prepared by Mr.Shashi Pal Jain (General Manager) who deals with all banking of the concern. Company is gaining very good profit over its sales. Company is getting very good return by recent three financial years. The Loss incurred in the financial year 2008-09 is only due to the unexpected demand by the Legal Metrology Department of Punjab of Rs.573 Lac that the company had to pay to the extent of Rs.300 Lac in the financial year 2008-09 and left amount of Rs.273 Lac in

57

the next financial year e.g. 2010-11. Except this case company is very good at its financial condition. If we talking about transactions of company with vendors and customers then it is noted that company is exporting the Measuring Tapes manufactured to more than 60 countries of the word and total Export Sales Ratio in the total Sales is Approximate % in 2008-09 and % in 2009-10 and the Import Ratio in the total Raw Material Consumed is Approximate to 37.74% in 2008-09 and 29.31% in 2009-10 to its total consumption. So it is clear that the company is hugely contributing towards the globalization. Management of the company is very mindful and strong thats why the company is having very good Gross Profit and Net Profit Ratio on its Sales. Cost reduction techniques are followed to prevent the unnecessary wastages. Company is having full attention towards the Quality of the products manufactured. Efforts are being done at every stage of manufacturing to increase the quality of the products and to maintain the standard of the products. Generally talking about the future plan from management it is expected that FMI Limited is planning to increase its current sales by 20% in the next financial year. It can be said in another words that company is stepping towards the growth and efficiency. Very Effective plans for growth and progress are being followed by Company which is very needy to survive in the todays age of pure competitions. So after all the above facts and discussions it is clear that Company is very good at its financial position and affairs. Company is not very efficient only at its finance but also its import, export quality and other resources and procedures. So it can be said that FMI is the one of the most biggest and efficient companies of Punjab and even India in near Future.

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RECOMMENDATIONS
From the above conclusion it is made very clear that the company is having very strong position at every aspect but I want to suggest company and to give some recommendations which may be followed for the betterment of FMI Ltd Ludhiana. More efforts should put on the Cost Cutting techniques to reduce the cost of product manufactured. The company should keep in touch with their agents properly & when ever they find the channel unfit they must go for a change.

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More concentration should be given on the Promotion of Sale of Products. Management should seek more professionally educated persons in their respective areas or Proper training programs should be there to educate the personnel in their fields to gain the smoothness in work and to increase efficiency. Due importance should be given to advertisements of the products. The quantity & quality of the finished product should be improved Accountability for each task should be fixed strictly. This is very important point but lack of accountability is noted in the many processes of manufacturing and officials. Motivational programs should be introduced to motivate the employees to work hard and to make Team Efforts to achieve the Organizational Objectives.

Avoid idle running of Plant & Machinery. Employees should be given adequate Remuneration according to their contribution so that their concentration be only on the betterment of the Organization, as we all know A Good and Concentrated Team of Personnel is more valuable for the Organization even than of Money in Hand Wastage should be tried to minimize to the maximum extent possible.

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LIMITATIONS OF REPORT

As I have gone through every aspect of the tasks performed by the FMI Limited employees and their policies and procedures to fulfillment the requirements at different levels, I found some Limitations in the Project Report prepared by me. These all are non controllable errors that can not be avoided by me. I would like to discuss here all these

61

As this report is the result of my Practical training at FMI Limited for Five weeks, but still I found that there was shortage of time to get the full fledge knowledge of the tasks performed in corrective manners. There was very busy schedule of Account department due to Auditing of Accounts of the Concern.

BIBLIOGRAPHY
Research Methodology, C.R.Kothari Management Accounting, Shashi K Gupta & R.K.Sharma Mathematics and Statistics, R.L.Aggarwal Old Reports of FMI Limited Financial Statements of FMI Limited Other Documents as Catalogue, Products Chart, Flow Chart of Manufacturing etc

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