financial analysis of a company in india

8/8/2019 Financial Analysis of a Company in India

1/68

Index

Page no.

2 Brief introduction of the company4 Organization hierarchy of the company

6 Financial Highlights:

Sales / Total income

PBDIT

PBDT

PAT

Dividend pay out

DPS

PPS

BVPS

Net worth

Total assets19 Accounting policies

24 Ratios Analysis

Liquidity Ratios

Leverage Ratios

Profitability Ratios

Turnover Ratios

Valuation Ratios

49 Share holding pattern

54 Cash flow statement analysis56 Awards & achievements

58 Environment protection measures

60 Social responsibilities

62 Human resource analysis64 Conclusion

66 Bibliography

68 Annexure

1


2/68

Introduction of the company

2


3/68

The history of Crompton Greaves goes back to 1878 when Col. R.E.B. Crompton

founded R.E.B.Crompton & Company. The company merged with F.A Parkinson in the

year 1927 to form Crompton Parkinson Ltd., (CPL). Greaves Cotton and Co (GCC) wasappointed as their concessionaire in India. In 1937, CPL established, it's wholly owned

Indian subsidiary viz. Crompton Parkinson Works Ltd., in Bombay, along with a sales

organization, Greaves Cotton & Crompton Parkinson Ltd., in collaboration with GCC. Inthe year 1947, with the dawn of Indian independence, the company was taken over by

Lala Karamchand Thapar, an eminent Indian industrialist. Crompton Greaves is

headquartered in a self-owned landmark building at Worli, Mumbai.

3


4/68

Organization hierarchy of the

company

4


5/68

When two or more persons work together towards a common goal, authority and

responsibility are allocated among them so that their efforts may become effective. This

is the task of organizing. It is known as designing of organizational structure.

Top Management

Top management consists of those executives who have the authority to take the

important policy decision. Top management is referred to as top level or highest level ordirector level. It is made up of the board of directors, managing directors and the other

key officers.

Top management is found invariably in all types of business organization. It is made upof the owner himself in the individual proprietorship, active partner in the partnership,

firm and director and chief executive in a joint stock company. The managing committeeis treated as top-management in co-operative society. At the top level management, there

is more of management than administration. The degree of the success of the businessunit mainly depends on the degree of efficiency of its top level management.

CORPORATE INFORMATION

Board of Directors

G Thapar CHAIRMANSM Trehan MANAGING DIRECTOR

S Bayman

O Goswami

S LabrooM Pudumjee

SP TalwarV von Massow

CHIEF FINANCIAL OFFICER BR Jaju

COMPANY SECRETARY W HenriquesAUDITORS Sharp & Tannan

SOLICITORS Crawford Bayley & Co.

5


6/68


7/68

Over the last five years, Crompton Greaves Ltd (Crompton Greaves or the Company)Has successfully executed several initiatives: Creating synergies, integration, growth and

a transformation from being a first-rate Indian company to a world leader in its business

lines. Thus, despite operating in an increasingly competitive global environment, theCompany has been consistently reaping benefits from these efforts and achieving higher

growth and Profitability.

BANKERS

Union Bank of India IDBI Bank Ltd

State Bank of India Standard Chartered BankCorporation Bank ABN Amro Bank NA

Canara Bank Calyon Bank

Bank of Maharashtra ICICI Bank Ltd

7


8/68

Total income

Year Total incomeRS. MILLION

1999 16939.10

2000 16905.40

2001 13831.90

2002 16158.40

2003 17398.50

2004 18880.70

2005 22002.54

2006 44115.51

2007 60393.18

2008 72490.80

0

20000

40000

60000

80000

8


9/68

Net Sales

Year Net SalesRS. MILLION

1999 15549.10

2000 15258.30

2001 12543.40

2002 14785.70

2003 15870.20

2004 17113.20

2005 19886.86

2006 41265.10

2007 56395.60

2008 68323.37

0

20000

40000

60000

80000

PBDIT

9


10/68

Year PBDITRS. MILLION

1999 1650.20

2000 353.50

2001 -435.70

2002 1566.70

2003 1702.70

2004 1845.90

2005 1942.77

2006 3895.01

2007 5879.58

2008 8115.93

-2000

0

2000

4000

6000

8000

10000

PBDT

10


11/68

Year PBDTRS. MILLION

1999 241.20

2000 -1463.20

2001 -729.10

2002 68.80

2003 372.00

2004 895.20

2005 1284.44

2006 2773.17

2007 4359.56

2008 6152.39

-2000

-1000

01000

2000

3000

4000

5000

6000

7000

PAT

11


12/68

Year PATRS. MILLION

1999 231.20

2000 -1465.70

2001 -731.60

2002 41.30

2003 281.70

2004 708.30

2005 1171.21

2006 2320.27

2007 2865.00

2008 4098.22

-2000

-1000

0

1000

2000

3000

4000

5000

Dividend pay out

12


13/68

Year Dividend pay

outRS. MILLION

1999 130.50

2000 -

2001 -

2002 -

2003 -

2004 366.56

2005 366.56

2006 366.61

2007 471.29

2008 586.51

0

200

400

600

1 2 3 4 5 6 7 8 9 10

S1

Series1

Dividend %

13


14/68

Year Dividend

In %

1999 25.00

2000 -

2001 -

2002 -

2003 -

2004 70.00

2005 70.00

2006 70.00

2007 70.00

2008 80.00

0

20

40

60

80

1 2 3 4 5 6 7 8 9 10

S1

Series1

EPS

14


15/68

Year EPSIn RS.

1999 0.63

2000 -4.00

2001 -2.00

2002 0.11

2003 0.77

2004 1.92

2005 3.27

2006 6.35

2007 7.69

2008 11.10

-4

-2

0

2

4

6

8

10

12

Book Value per Share

15


16/68

Year BVPSIn RS.

1999 15.02

2000 9.97

2001 7.26

2002 6.49

2003 7.94

2004 9.29

2005 11.43

2006 20.26

2007 25.29

2008 33.91

0

5

10

15

20

25

30

35

Net worth

16


17/68

Year Net worthRS. MILLION

1999 5483.00

2000 3655.60

2001 2661.00

2002 2380.60

2003 2911.90

2004 3404.80

2005 4189.61

2006 7427.42

2007 9270.31

2008 12429.74

0

2000

4000

6000

8000

10000

12000

14000

Total assets

17


18/68

Year Total assetsRS. MILLION

1999 12829.20

2000 12165.70

2001 8934.20

2002 8087.70

2003 7504.10

2004 6844.00

2005 7347.84

2006 11765.87

2007 18599.02

2008 20971.75

0

5000

10000

15000

20000

25000

18


19/68

Accounting policies

Fixed Assets

19


20/68

(a) Fixed assets are stated at cost net of tax / duty credit availed, if any, except for land

and buildings added prior to 30th June, 1985 which are stated at revalued cost as at that

date based on the report of technical expert (in case of Parent Company).(b) Lump sum fees paid for acquisition of technical know-how relating to plant and

machinery is capitalised as intangible asset.

(c) Fixed assets are eliminated from financial statements, either on disposal or whenretired from active use. The retired assets are disposed off immediately. The capitalised

cost of such disposed / retired assets are removed from the fixed assets records.

(d) Pre-operative expenses, including interest on borrowings till the date ofcommissioning, for the projects, where applicable, incurred till

The projects are ready for commercial production, are treated as part of the project cost

and capitalised.

(e) Internally manufactured / constructed fixed assets are capitalised at factory cost,including excise duty, where applicable.

(f) Machinery spares which are specific to particular item of fixed assets and whose use is

irregular are capitalised as part of the cost of machinery.

Impairment of Assets

(a) The carrying amount of assets, other than inventories is reviewed at each balancesheet date, to determine whether there is any indication of impairment. If any such

indication exists, the recoverable amount of the assets is estimated.

(b) An impairment loss is recognized, whenever the carrying amount of assets or its cash

generating units exceeds its recoverable amount.The recoverable amount is the greater of the assets net selling price and value in use

which is determined based on the estimated future cash flow generated from the

continuing use of an asset and from its disposal at the end of its useful life, discounted totheir present values.

(c) An impairment loss is reversed, if there has been a change in the estimates made to

determine and recognize the recoverable amountin the earlier year.

Intangible Assets and Amortization

Intangible assets are recognized as per the criteria specified in the Accounting Standard -

Intangible Assets and are amortized as under:

(a) Leasehold land: Over the period of lease;

(b) Specialized software: Over a period of three - five years;(c) Lump sum fees for technical know-how: Over a period of five years from the year of

commercial production;

(d) Goodwill on consolidation: Over the period of ten years.(e) Other intangible assets: Over the period of five years

Investments

(a) Long term investments are carried at cost after providing for any diminution in value,

if such diminution is of other than temporary nature.

20


21/68

(b) Current investments are carried at lower of cost or market value. The determination of

carrying costs of such investments is done on the basis of specific identification.

Inventories

Inventories are valued at lower of cost or net realizable value, after providing for

obsolescence and damage as under:(a) Raw materials, packing materials: At Cost, on FIFO / Weighted average basis stores

and spares

(b) Work-in-progress - Manufacturing: At Cost plus appropriate production overheads(c) Work-in-progress - Contracts: At Cost till certain percentage of completion and

thereafter at realizable value

(d) Finished goods - Manufacturing: At Cost, plus appropriate production overheads,

including excise duty paid / payableon such goods

(e) Finished goods - Trading: At Cost, on Weighted average basis.

Foreign Currency Transactions, Forward Contracts and Derivatives(a) The reporting currency of the Company is Indian Rupee.

(b) Foreign currency transactions are recorded on initial recognition in the reportingcurrency, using the exchange rate at the date of transaction. At each balance sheet,

foreign currency monetary items are reported using the closing rate. Exchange

differences that arise on settlement of monetary items are recognized as income or

expense in the period in which they arise.(c) The Company uses foreign exchange forward contract to hedge its exposure to

movements in foreign exchange rates. The use of these contracts reduces the risk or cost

and the company does not use these contracts for trading or speculation purposes. Cashflows arising on account of roll over / cancellation are recognized as income / expense of

the period in line with the movement in the underlying exposures.

(d) Derivative transactions are considered as off-balance sheet items and cash flowsarising there from are recognized in the books of account as and when the settlements

take place / over the tenor thereof in accordance with the terms of the respective

contracts.(e) In accordance with the requirement of Accounting Standard (AS) 11The effects of

changes in foreign exchange rates, operations of foreign subsidiaries which are

considered as non-integral operations, their financial statements are converted in Indian

Rupees at the following exchange rates:(i) Revenue and Expenses: At the average exchange rate during the year

(ii) Current Assets and Current Liabilities: Exchange rate prevailing at the end of the

year.(iii) Fixed Assets: Exchange rate prevailing at the end of the year.

(iv) Share Capital: At the original rate when the capital was infused.

(v) The resultant translation exchange differences are accumulated in the ForeignCurrency Translation Reserve.

Revenue Recognition

21


22/68

(a) Revenue from sale of products are recognized when all the significant risk and reward

of ownership of the products are passed on to the customers, which is generally on

despatch of goods and acceptance.(b) Service income is recognized as per the terms of the contract with the customer, when

the related services are performed.

(c) Sales include excise duty and price variation and is recognized in terms of contractswith the customers. Sales exclude value added tax

/ Sales tax, brokerage and commission.

(d) Revenue from contracts is recognized based on percentage completion after providingfor expected losses.

(e) Excise duty in respect of finished goods is included in the valuation of finished goods.

Employee Benefits

Employee benefits including contributions towards social security, retirement benefitschemes are accounted for based on the regulatory framework in the respective countries

and employment rules / contracts applicable to the specific companies.

Depreciation(a) Depreciation on the fixed assets is provided at the minimum rates and in the manner

specified in Schedule XIV of the Companies Act,1956, on written down value method except in the case of parent Company, where

depreciation on buildings and plant and equipment is provided on straight line method.

(b) Building constructed on leasehold land are depreciated at normal rate as prescribed in

Schedule XIV to the Companies Act, 1956, where the lease period of land is beyond thelife of the building. In other cases, amortized over the lease period.

(c) In the case of revalued assets, the difference between the depreciation based on

revaluation and the depreciation charged on historical cost is recouped out of revaluationreserve.

(d) In case of impaired assets, the depreciation is charged on the adjusted cost computed

after impairment.(e) In case of foreign subsidiaries, depreciation on fixed assets has been provided at the

rates required/permissible by the Generally Accepted Accounting Principles of the

respective countries. However, the depreciation rates are higher than the rates specified inthe

Schedule XIV of the Companies Act, 1956.

Research and Development

(a) Revenue expenditure on research and development is charged under respective heads

of account.

(b) Capital expenditure on research and development is included as part of fixed assetsand depreciated on the same basis as other fixed assets.

Borrowing Costs

22


23/68

(a) Borrowing costs that are attributable to the acquisition, construction or production of a

qualifying asset are capitalised as part of the cost of such asset till such time as the asset

is ready for its intended use or sale.(b) All other borrowing costs are recognized as expense in the period in which they are

incurred.

Leases

(a) Assets acquired under leases where the company has substantially all the risks and

rewards of ownership are classified as finance leases. Such assets are capitalised at theinception of the lease at the lower of the fair value or the present value of minimum lease

payments and a liability is created for an equivalent amount. Each lease rental paid is

allocated between the liability and the interest cost, so as to obtain a constant periodic

rate of interest on the outstanding liability for each period.(b) Assets acquired on leases where a significant portion of the risks and rewards of

ownership are retained by the lessor are classified as operating leases. Lease rentals are

charged to the profit and loss account on accrual basis

Taxes on Income

(a) Tax on income for the current period is determined on the basis of estimated taxableincome and tax credits computed in accordance with the provisions of relevant tax laws

and based on the expected outcome of assessments/appeals.

(b) Deferred tax is recognized on timing difference between the accounting income and

the taxable income for the year and quantified using the tax rates and laws enacted orsubstantively enacted as on the Balance Sheet date.

(c) Deferred tax assets are recognized and carried forward only to the extent that there is

reasonable certainty supported by convincing evidence that sufficient future taxableincome will be available against which such deferred tax assets can be realized.

Provisions, Contingent liabilities and Contingent assets`(a) Provisions are recognized for liabilities that can be measured only by using a

substantial degree of estimation, if

i) The Company has a present obligation as a result of past event;ii) A probable outflow of resources is expected to settle the obligation; and

iii) The amount of the obligation can be reliably estimated.

(b) Reimbursements by another party, expected in respect of expenditure required to

settle a provision, is recognized when it is virtual certain that reimbursement will bereceived if obligation is settled.

(c) Contingent liability is disclosed in the case of

i) A present obligation arising from past event, when it is not probable that an outflow ofresources will be required to settle the obligation;

ii) A possible obligation, unless the probability of outflow of resources is remote.

(d) Contingent assets neither disclosed nor recognized.(e) Provision, contingent liabilities and contingent assets are reviewed at each balance

sheet date.

23


24/68

Ratio Analysis

(A) LIQUIDITY RATIOS

24


25/68

(1) Current Ratio:

This is most widely used ratio shows the proportion of current assets to

Current liabilities. It is also known as Working Capital Ratio.

Current Assets

Current Ratio = ------------------------

Current Liabilities

Year 2006 2007 2008

Current Ratio

11336.87

-------------- = 1.41

8023.62

14608.45

------------- = 1.39

10474.20

16562.24

-------------- = 1.28

12952.93

Analysis:

This ratio indicates that the firm capacity to meet short-term obligations isdecreasing. From 1.41 in the year 2006 it has decrease to 1.39 in the year

2007 and again to 1.28 in the year 2008.

(2) Quick Ratio:

25


26/68

To remove the defect of current ratio, quick ratio is used. It is a variant of current

which is designed to show the amount of funds available to meet immediate

payments. It is obtained by dividing the liquid assets by liquid liabilities.

Liquid assetsQuick ratio = -----------------------

Liquid liabilities

Here, Liquid assets = Current assets Stock (Inventory)

Liquid liabilities = Current liabilities Bank overdraft

Year 2006 2007 2008

Quick ratio

9418.78

----------- = 1.178023.62

12138.35

----------- = 1.1610474.20

13932.73

------------- = 1.0712952.93

Analysis:

This ratio indicates that the firm capacity to meet immediate obligations is

decreasing. From 1.17 in the year 2006 it has decrease to 1.16 in the year 2007and again to 1.07 in the year 2008.

(B) LEVERAGE RATIOS

26


27/68

(1) Debt-Equity ratio :

This ratio is only another form of proprietary ratio and establishes relationship

between the outside long-term liabilities and owners fund. It shows the

proportion of long-term external equities and internal equities. i.e. proportion offunds provided by long-term creditors and that provided by shareholders or

proprietors.

Total debt

Debt-Equity ratio = ------------------Owners fund

Year 2006 2007 2008

Debt-Equity ratio 10521.31

------------ = 1.96

5363.77

13174.53

------------ = 1.95

6742.97

13828.52

-------------- = 1.48

9307.47

Analysis:

This ratio decreasing this means that outside creditors claim in the business is

reducing and that of owners is increasing. From 1.96 in the year 2006 it hasincrease to 1.95 in the year 2007 and again to 1.48 in the year 2008.

(2) Capital employed to net worth ratio:

27


28/68

This ratio helps in finding the relation ship between capital employed in the firm

and net worth of the firm.

Capital Employed

Capital employed to Net worth ratio = ---------------------------Net Worth

Year 2006 2007 2008

Capital employed to

Net worth ratio

7861.46

------------ = 1.46

5363.77

9443.3

------------ = 1.40

6742.97

8755.9

------------ = 0.94

9307.47

Analysis:

The higher this ratio, the stronger the financial of the business, as itsignifies that proprietors have provided larger funds to purchase assets.

But in this case it is decreasing. From 1.46 in the year 2006 it has decrease

to 1.40 in the year 2007 and again to 0.94 in the year 2008.

(2) Fixed interest coverage ratio:

28


29/68

This ratio is helpful in finding the firms capacity to meet fixed interest

charge.

EBITFixed interest coverage ratio = -----------------

Interest

Year 2006 2007 2008

Fixed interestcoverage ratio

2653.42

-------------- =263.67 10.06

3767.09

-------------- =303.50 12.41

5534.22

-------------- =271.14 20.41

Analysis:

This ratio shows the share of interest in profit. Higher this ratio showsweak financial condition. But in this case it is increasing. From 10.06 in

the year 2006 it has increase to 12.41 in the year 2007 and again to

20.41in the year 2008.

(C) PROFITABILITY RATIOS

29


30/68

(1) Gross Profit Ratio:

It is the basic measure of profitability of business. It expresses relationship

between gross profit earned to net sale. It is also known as Gross margin.

Sales Cost of Goods Sold

Gross Profit Ratio = ------------------------------------- * 100

Net Sales

Here,

Cost of goods sold = Opening stock + Purchases Closing stock

Year 2006 2007 2008

Gross Profit Ratio 17312.72-------------- * 100 =

25205.93 68.69

15001.66-------------- * 100 =

33676.04 44.55

18802.34-------------- * 100 =

38757.56 48.51

Analysis:

The higher this ratio shows more efficiency of a firm. But in this case it isdecreasing. From 68.69 in the year 2006 it has decrease to 44.55 in the year 2007

and again to 48.51 in the year 2008.

(2) Net Profit Ratio:

30


31/68

This ratio measures the relation between the net profits and sales of the firm. The

net profit is obtained after charging operating expenses, interest, depreciation and

taxes to the gross profit.

PAT

Net Profit Ratio = ----------------- * 100

Net Sales

Year 2006 2007 2008

Net Profit Ratio1630.48-------------- * 100 =

25205.93 6.47

1923.73-------------- * 100 =

33676.04 5.71

3139.22-------------- * 100 =

38757.56 8.10

Analysis:

The decrease in this ratio shows better picture of the firm. But in this case

it is increasing. From 6.47 in the year 2006 it has decrease to 5.71 in the

year 2007 and again increase to 8.10in the year 2008.

(3) Operating Profit Ratio:

31


32/68

This ratio shows relationship between profit and net sales. It helps to ascertain

operating efficiency.

EBIT Other income

Operating Profit Ratio = ---------------------------Net Sales

Year 2006 2007 2008

Operating ProfitRatio

2326.15

-------------- =25205.93 0.092

3418.34

-------------- =33676.04 0.102

4837.91

-------------- =38757.56 0.125

Analysis:

The decrease in this ratio shows better picture of the firm. But in this case it isincreasing. From 0.092 in the year 2006 it has increase to 0.102 in the year 2007

and again increase to 0.125 in the year 2008

(4) Operating Ratio:

32


33/68

It is a ratio that shows relationship between cost of goods sold plus operating

expenses to sales. Operating expenses includes administrative and selling and

distribution expenses.

Operating Ratio = 1 - Operating Profit Ratio

Year 2006 2007 2008

Operating Ratio1 - 0.092 = 0.908

1 - 0.102 = 0.8981 - 0.125 = 0.875

Analysis:

This ratio shows the operating efficiency of the firm lower this ratio indicates

higher profits. And in this case it is decreasing. From 0.908 in the year 2006 it hasdecrease to 0.898 in the year 2007 and again to 0.875 in the year 2008.

(5) Expenses Ratio:

33


34/68

For the purpose of ascertaining relationship between operating expenses and net

sales, expenses ratios are computed.

Total ExpensesExpenses Ratio = ---------------------- * 100

Net sales

Year 2006 2007 2008

Expenses Ratio23585.22

-------------- * 100 =

25205.93 93.57

30954.76-------------- * 100 =

33676.04 91.92

34597.35-------------- * 100 =

38757.56 89.27

Analysis:

The lower this ratio shows a desirable positioning of the firm. And in this case it

is decreasing. From 93.57 in the year 2006 it has decrease to 91.92 in the year


(6) Return on Shareholders funds:

34


35/68

Profit is earned in business for the owners and so they are naturally interested in

the return they get on their money invested in companys business. This is

measured by Return on Shareholders funds.

PATReturn on Shareholders funds = ------------------------------ * 100

Shareholders funds

Year 2006 2007 2008

Return on

Shareholders funds

1630.48-------------- * 100 =

5363.77 30.40

1923.73-------------- * 100 =

6742.97 28.53

3139.22-------------- * 100 =

9307.47 33.73

Analysis:

This ratio shows how profitably the funds provided by the owners are usedin the business. And in this case it is unstable it decrease to 20.53 in the

year 2007 from 30.40 in the year 2006 and again increase to 33.73 in the

year 2008.

(7) Return on Total Assets:

35


36/68

The return on total assets implies how the funds supplied by both owners and

creditors are utilized in business. Thus it measures the overall profitability of thebusiness.

PAT

Return on Total Assets = ---------------------- * 100

Total Assets

Year 2006 2007 2008

Return on Total Assets1630.48

-------------- * 100 =

15996.08 10.19

1923.73-------------- * 100 =

20293.3 9.48

3139.22-------------- * 100 =

21715.2 14.46

Analysis:

This ratio shows how profitably the assets provided by the owners are

used in the business. And in this case it is unstable it decrease to 9.48 in

the year 2007 from 10.19 in the year 2006 and again increase to 14.46 in

the year 2008.

(8) Return on capital employed:

36


37/68

Perhaps the most widely used ratio for measuring the profitability of any

enterprise is Return on capital employed.

PATReturn on capital employed = -------------------------------- * 100

Total capital employed

Year 2006 2007 2008

Return on capital

employed

1630.48-------------- * 100 =

7861.46 20.74

1923.73-------------- * 100 =

9443.3 20.37

3139.22-------------- * 100 =

8755.9 35.85

Analysis:

This ratio is useful in measuring the managerial efficiency of operating th

business. And in this case it is unstable it decrease to 20.37 in the year2007 from 20.74 in the year 2006 and again increase to 35.85 in the year

2008.

(D) TURNOVER RATIOS

37


38/68

(1) Inventory turnover ratio:

The ratio signifying the efficiency of sales is the stock turnover. It shows the

number of times the average stock is turned over during the year.

Cost of Goods SoldInventory turnover ratio = --------------------------------

Average inventory

Year 2006 2007 2008

Inventory turnover

ratio

18220.48-------------- =

514.275 35.43

19023.13-------------- =

596.12 31.91

20651.53-------------- =

821.91 25.12

Analysis:

This ratio shows how stock is turned into sales. And in this case it is decreasing.

From 35.43 in the year 2006 it has decrease to 31.91 in the year 2007 and again to25.12 in the year 2008.

(2) Fixed assets turnover ratio:

38


39/68

To ascertain the efficiency and profitability of business, the total fixed assets are

compared to sales.

Net salesFixed assets turnover ratio = ----------------------

Net Fixed assets

Year 2006 2007 2008

Fixed assetsturnover ratio

25205.93

-------------- =3637.90 6.93

33676.04

-------------- =4333.76 7.77

38757.56

-------------- =5152.96 7.52

Analysis:

Higher this ratio indicates that the fixed assets are used efficiently in the firm.And in this case it is increasing. From 6.93 in the year 2006 it has increase to 7.77

in the year 2007 and again to 7.52 in the year 2008.

(3) Working capital turnover ratio:

39


40/68

This ratio is computed to ascertain how efficiently working capital is utilized in

business. It is computed by dividing Net sales by Net working capital.

Net Sales

Working capital turnover ratio = --------------------------------Net working capital

Year 2006 2007 2008

Working capital

turnover ratio

25205.93

-------------- =

3313.25 7.61

33676.04

-------------- =

4134.25 8.15

38757.56

-------------- =

3609.31 10.74

Analysis:

This ratio is increasing which show a better position of the firm. it is

increasing, From 7.61in the year 2006 it has increase to 8.15 in the year


(4) Total assets turnover ratio:

40


41/68

The funds used in business are employed in both fixed assets and current assets

both, and profit is earned with the help of both. Hence it would be useful to know

the proportion of total assets to sales.

Net SalesTotal assets turnover ratio = --------------------------

Total Assets

Year 2006 2007 2008

Total assetsturnover ratio

25205.93

-------------- =15996.08 1.58

33676.04

--------------- =20293.3 1.66

38757.56

-------------- =21715.20 1.78

Analysis:

The higher this ratio indicates more efficient utilization of assets in the firm. And

in this case it is increasing. From 1.58 in the year 2006 it has increase to 1.66 inthe year 2007 and again to 1.78 in the year 2008.

(5) Net worth turnover ratio:

41


42/68

This ratio is computed to ascertain how efficiently capital employed is utilized in

business. It is computed by dividing Net sales by Net worth.

Net Sales

Net worth turnover ratio = ----------------------Net Worth

Year 2006 2007 2008

Net worth

turnover ratio

25205.93

-------------- =

5363.77 4.70

33676.04

-------------- =

6742.97 4.99

38757.56

-------------- =

9307.47 4.16

Analysis:

The higher this ratio indicates more efficient utilization of capital in the firm. And

in this case it is increasing. From 4.70 in the year 2006 it has increase to 45.99 in

the year 2007 and decrease to 4.16 in the year 2008.

(6) Debtors turnover ratio:

42


43/68

The debtor turnover suggests the number of times the amount of credit sale is

collected during the year.

Net Sales

Debtors turnover ratio = ---------------------------------------

Debtors + Bills Receivables

Year 2006 2007 2008

Debtors

turnover ratio

25205.93-------------- =

6596.41 3.82

33676.04-------------- =

8038.9 4.19

38757.56-------------- =

9562.2 4.05

Analysis:

The higher this ratio indicates the weak credit collection policy of the firm. And

in this case it is increasing. From 3.82 in the year 2006 it has increase to 41.99 in

the year 2007 and decrease to 4.05 in the year 2008.

(E) VALUATION RATIOS

43


44/68

(1) Dividend yield ratio:

This ratio shows relationship between Dividend per share and Market value pershare. It helps to ascertain efficiency of a firm.

Dividend per share

Dividend yield ratio = ----------------------------------

Market value per share

Year 2006 2007 2008

Dividend yield ratio -------------- = -------------- = -------------- =

Analysis:

(2) Dividend pay-out ratio:

44


45/68

It is proportion of actual dividend received to earning per share or the amount

which belong to the equity share holders.

Dividend per share

Dividend pay-out ratio = -------------------------------

Earning per share

Year 2006 2007 2008

Dividend pay-out

ratio

-------------- =

4.45

-------------- =

5.25

-------------- =

8.56

Analysis:

(3) Price earning ratio:

45


46/68

It shows the relation between the market price of the share and the earning per

share.

Market price per share

Price earning ratio = -----------------------------------

Earning per share

Year 2006 2007 2008

Price earning ratio -------------- =4.45

-------------- =5.25

-------------- =8.56

Analysis:

(4) Earning per share:

46


47/68

This ratio shows relationship between profit and no. of equity share. It helps to

ascertain efficiency of a firm.

PAT

Earning per share = ------------------------------No. of equity shares

Year 2006 2007 2008

Earning per share

1630.48

-------------- =625000000 0.00

1923.73

-------------- =625000000

0.00

3134.22

-------------- =625000000 0.00

Analysis:

(5) Dividend per share:

47


48/68

Dividend per share is the amount of actual dividend paid to equity shareholders

divided by the number of equity shares outstanding.

Interim equity dividend + Final Equity dividendDividend per share = ----------------------------------------------------------------

No. of Equity Shares

Year 2006 2007 2008

Dividend per share ----------------- =625000000

---------------- =625000000

---------------- =625000000

Analysis:

48


49/68

Share holding pattern

49


50/68

Shareholding Pattern as of Quarter ended : 31st December 2008 as per Clause 35 of

listing agreement

Code : CG

Face Value : Rs. 2.00/-

Cat.

code

Category Share

Holder

Number

of share

Holders

Total Number

of Shares

No Of

sharesHeld in

Demat Form

Total shareholding

as a percentage of

total number of

shares

As a %

of

(A+B)1

As a % of

(A+B+C)1

(A) Share Holding of Promoters and promoters Group

1 Indian (a) Individuals/Hindu

Undivided Family1 220,715.00 220,715.00 0.0604 0.0602

(b) Central

Government/StateGovts

0 0.00 0.00 0.00 0.00

(c) Bodies Corporate 5 143,440,675.00 143,440,675.00 39.2834 39.1309

(d) Financial

Institutions / Banks

0 0.00 0.00 0.00 0.00

(e) Any Other 0 0.00 0.00 0.00 0.00

Sub Total (A)(1) 6 143,661,390.00 143,661,390.00 39.3438 39.1911

2 Foreign

(a) Individuals (Non-

Resident

Individuals/ForeignIndividuals)

0 0.00 0.00 0.00 0.00

(b) Bodies Corporate 0 0.00 0.00 0.00 0.00

(c) Financial

Institutions / Banks

0 0.00 0.00 0.00 0.00

(d) Any Other 0 0.00 0.00 0.00 0.00

Sub Total (A)(2) 0 0.00 0.00 0.00 0.00

Total

Shareholding of

Promoter and

Promoter Group

(A)=(A)(1)+(A)(2)

6

143,661,390.00

143,661,390.00 39.3438 39.1911

50


51/68

(B) Public

shareholding

1 Institutions

(a) Mutual Funds/UTI 125 74,842,533.00 74,837,265.00 20.4967 20.4172

(b) FinancialInstitutions / Banks

35 826,415.00 777,681.00 0.2263 0.2254

(c) Central

Government/StateGovts

0 0.00 0.00 0.00 0.00

(d) Venture Capital

Funds

0 0.00 0.00 0.00 0.00

(e) InsuranceCompanies

7 12,056,089.00 12,046,489.00 3.3017 3.2889

(f) Foreign

InstitutionalInvestors

126 59,982,645.00 59,910,545.00 16.4271 16.3634

(g) Foreign VentureCapital Investors

0 0.00 0.00 0.00 0.00

(h) Any Other

(specify)

0 0.00 0.00 0.00 0.00

Sub-Total (B) (1) 293 147,707,682.00 147,571,980.00 40.4519 40.2949

2 Non-institutions

(a) Bodies Corporate 1,503 14,979,371.00 14,830,475.00 4.1023 4.0864

(b) i) Individualsshareholders

holding nominalShares capital up to

Rs 1lakh

56,431 26,249,380.00 19,941,358.00 7.1888 7.1609

ii. Individual

shareholdersholding nominal

share capital in

excess of Rs. 1lakh

36 8,208,385.00 8,014,114.00 2.2480 2.2393

(c) Non Residents

i NRI Rep 742 676,262.00 630,512.00 0.1852 0.1845

ii NRI Non -Rept 1,021 489,318.00 406,402.00 0.1340 0.1335

iii OCB 4 40,350.00 40,000.00 0.0111 0.0110

iv Foreign Bodies 5 23,129,963.00 23,129,963.00 6.3345 6.3099

v Foreign National 2 1,550.00 1,550.00 0.004 0.004

51


52/68

VI Any Other 0 0.00 0.00 0.00 0.00

Sub-Total (B)(2 ) 59,744 73,774,579.00 66,994,374.00 20.2043 20.1258

Total Of Public

Shareholding

Public Group

(B)=(B)(1)+(B)(2)

60,037 221,482,261.00 214,566,354.00 60.6562 60.4207

Total (A+B) 60,043 365,143,651 358,227,744 100.00 99.6118

(C) Shares held by

Custodians and

against which

Depository

Receipts have

been issued

2 1,422,941.00 1,419,441.00 xxxx 0.3882

GRAND TOTAL(A)+(B)+(C)

60,045 366,566,592.00 359,647,185.00 xxxx 100.00

Pie Chart

52


53/68

Total Shareholding

of Promoter and

Promoter Group

Total Of Public

Shareholding

Public Group

Shares held by

Custodians and

against which

53


54/68

Cash flow statement analysis

A statement showing inflow of cash and outflow of cash during the last year and as a

result the balance of cash at the end of the year, is known as Cash Flow Statement.This statement helps management to know the actual liquid position or position of cash

54


55/68

on hand and also to ascertain whether the business is able to get enough cash to meet the

liabilities as and when they arise.

Analysis:

The company is having a healthy liquid position it has sufficient cash to meet itsimmediate liabilities as an when they arise

55


56/68

Awards & achievements

Energy savings, reduction of waste, re-use/ recycling of materials are key

pillars in this area. Every manufacturing unit of Crompton Greaves has the ISO 14001

and OHSAS 18001 Certification. With its focus on reduction of pollution, the Companyhas also self-initiated a PUC Certification check for all vehicles entering its plant

complexes. At some plants, windmills have been installed on a trial basis, which supply

energy to the internal pathways within the complex.

During 2007-08, Crompton Greaves received the prestigious Greentech GoldAward, 2007, in the Engineering Sector. This is a recognition for the Companys

56


57/68

environmental management systems and development of green products and process

technologies. The Award acknowledged the Companys efforts in Developing eco

friendly products, packaging And processes, such as dry type transformers, BLDC motorsand fans, CFL lamps and energy Efficient luminaries, reduction of heating cycles By

more than 50% through new brazing and Sintering process technologies and premium

efficiency motors as well as motors for ecofriendly vehicles.

The Crompton Greaves Global R&D Centre, which has over 30 years of work to its

credit, is manned by 130 people of whom 16 Hold doctorates and 77 more arequalified Technical personnel

Crompton Greaves Global R&D Centre filed a total of 212 IPRs: 63 for patents, 144 for

design IPRs and 5 for trademarks

57


58/68

Environment protection measures

Energy savings, reduction of waste, re-use/ recycling of materials are key pillars in this

area. Every manufacturing unit of Crompton Greaves has the ISO 14001 and OHSAS

18001 certification. With its focus on reduction of pollution, the Company has also self-initiated a PUC Certification check for all vehicles entering its plant complexes. At some

plants, windmills have been installed on a trial basis, which supply energy to the internal

pathways within the complex.

Crompton Greaves has also chosen three days every year, to be dedicated to CSR, withthe intense involvement of all employees. These are:

58


59/68


60/68

Social responsibilities

It is the Crompton Greaves expressed intention that it will conduct its business andachieve commercial success, together with social responsibility to the communities that

surround its locations and society at large. The Companys CSR efforts during 2007-08

have continued to revolve around its CSR Statement of Intent, which focuses on three

areas: the Workplace, the Communities and the Environment

60


61/68

61


62/68

Human resource analysis

Crompton Greaves has always fostered an integrated approach towards HR that of

aligning its human capital in all its facets with business and organisational

transformation. Hence, the HR imperatives at Crompton Greaves encompass a widercanvas. It consists of HR management; productive and harmonious industrial relations;

raising productivity through the Crompton Greaves Production System (CGPS); business

excellence initiatives; and influencing the Companys thrust on Corporate SocialResponsibility.

62


63/68

Crompton Greaves efforts have focused on health and safety. These involve periodic

medical check-ups for all its employees, and an innovative hospitalization insurance

scheme together with a serious illness coverage.

63


64/68

Conclusion

The quality of households is enhanced when their money is invested into products such as

fans and lighting for basic comforts. Their lives are literally touched by delight.

Similarly, Crompton helps electricity boards and other utilities to reach electricity to thelast home and factory. Therefore, every individual in India who uses electricity can be

considered as Crompton customer. Hence, the company continues to further and

consolidate the initiatives that Colonel Crompton set into motion by focusing on meetingincreasing customer demands for products that are eco-friendly, energy efficient and with

intelligent monitoring and control systems.

All economic indicators point towards the manufacturing sector being the future driver of

64


65/68

India's economic growth. India is today preferred destination for sourcing various

engineering goods not only due to low cost but also due to high quality of products.

Although, the climate for the manufacturing sector is bright, the concern is the threat ofimminent competition from global players who are already in the process of setting up

manufacturing facilities in India. The market is expected to remain competition with an

added element of competition from imported products.

However, several measures that the company has already taken and it's plans for the

future, together with business impact of the Pauwels acquisition, will equip the companyto respond in adequate measure to this competitive pressure.

65


66/68

Bibliography

Principles & practice of accountancy: R.L. Gupta & V.K. Gupta, S. Chand & Co.

Advanced accounts volume II: M. C. Shukla, T. S. Grewal & S. C. Gupta, S. Chand &Co.

Advanced accounting with accounting standards and problems & solutions: Ravi M.

Kishore, Taxmann

66


67/68

67


68/68

Annexure

financial analysis of a company in india

Documents