financial performance analysis

FINANCIAL PERFORMANCE ANALYSIS OF TOWN

BENEFIT FUND (KUMBAKONAM) LTD

A FINAL PROJECT REPORT

Submitted by

A.MATHAVAN

Register Number: 1391022

In partial fulfilment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

in

DEPARTMENT OF MANAGEMENT STUDIES

SRI RAMAKRISHNA ENGINEERING COLLEGE

Coimbatore-641 022

APRIL 2015

SRI RAMAKRISHNA ENGINEERING COLLEGE

COIMBATORE-641 022

Department of Management Studies

A FINAL PROJECT REPORT

APRIL 2015

This is to certify that the project report entitled

FINANCIAL PERFORMANCE ANALYSIS OF TOWN

BENEFIT FUND (KUMBAKONAM) LTD

is the bonafide record of project work done by

A.MATHAVAN

Register Number: 1391022

of Department of Management Studies during the year 2013-2015

__________________ __________________________

Project Guide Director

Management Studies

Submitted for the project Viva-Voce examination held on ______________

_______________ ________________

Internal Examiner External Examiner

DECLARATION

I affirm that the Project titled “FINANCIAL PERFORMANCE ANALYSIS OF TOWN

BENEFIT FUND (KUMBAKONAM) LTD” being submitted in partial fulfilment for the

award of MBA is the original work carried out by me. It has not formed the part of any other

project work submitted for award of any degree or diploma, either in this or any other

university.

_______________

A.MATHAVAN

1391022

I certify that the declaration made above by the candidate is true.

Ms.Sharmila Preethi

Assistant Professor

Department of Management Studies

ACKNOWLEDGEMENT

I am very thankful to the Management, Dr.A.Ebenezer Jeyakumar, Director

(Academics) and Dr.N.R.Alamelu, Principal of Sri Ramakrishna Engineering College for

providing facilities to complete the project work.

I express my immense gratitude to Dr.K.Chitra, Director, Department of Management

Studies, for her constant support to undergo study in an extensive manner and her continuous

encouragement and valuable guidance to complete this project successfully.

I express my immense gratitude to Ms.Sharmila Preethi, Assistant Professor,

Department of Management Studies, Sri Ramakrishna Engineering College for the continuous

encouragement, support and guidance that has helped me in completing this project work

I extend my sincere thanks to Mr. B.Mukuntha Ramanujam, President, Town Benefit

Fund (Kumbakonam) Limited for rendering their whole hearted support from the organization

side for the successful completion of this project.

My heartfelt thanks to My Parents and My Friends who supported and encouraged

me and made my endeavours possible.

I also thank all who have helped me directly and indirectly in completing this project

work.

EXECUTIVE SUMMARY

Financial institution play an important role in the economy role in the economy by

channelizing funds and thus act as prominent stakeholders. Non-banking financial companies

(NBFC) are providing the services of investment advisory (IAS), asset management (AMS),

leasing and investment finance (IF). Financial system may have classification from banking

view i.e. banking companies and Non-banking financial companies (NBFCs).

Financial statement analysis involves careful selection of data from financial statement

for the primary purpose of forecasting the financial health of the company. This is

accomplished by examining trends in key financial data across companies, and analysing key

financial ratio.

OBJECTIVES OF THE STUDY

To analyse the liquidity and solvency position of Town Benefit Fund (Kumbakonam)

Ltd. To analyse the profitability position of the firm. To analyse the efficiency of the company. To

make a comparative study and common size statement of the company.

METHODLOGY

The study is descriptive in nature since it descriptive about the current financial position

of the company. The source of the data from audited financial statement of the company. The

tools used for analysis are ratio analysis comparative analysis common size analysis and trend

analysis.

FINDINGS

Gross Profit Ratio is high (12.10) in the year 2012-13 and it is low (0.25) in the year

2011-12. Net Profit Ratio is high (12.44) in the year 2011-12 and it is low (2.59) in the year

2011-12. Operating Profit Ratio is high (90.57) in the year 2011-12 and it is low (89.14) in the

year 2009-10. Return on Equity Ratio is high (29.84) in the year 2011-12 and it is low (7.19)

in the year 2013-14. Debt Equity Ratio is high (4.48) in the year 2010-11 and it is low (0.62)

in the year 2009-10. Capital Gearing Ratio is high (0.93) in the year 2009-10 and it is low

(0.09) in the year 2010-11.

The comparative income statement for year 2013-14 the total revenue has increased

(19.59%) in the year 2014. Expenses have increased (30.83%) in the year 2014. Profit before

tax has been decreased (-62.18%) in the year 2014. Profit after tax amount decreased (-61.83%)

in the year 2014. The comparative balance sheet for the year 2013-14 the share capital funds

has increased (17.29%) in the year 2014. Short-term borrowings has increased (5.72%) in the

year 2014. Short-term loans and advances has decreased (-1.48%) in the year 2014. Total assets

and liability has increased (21.06%) during the year 2014.

The common size income statement for year 2013-14 the total revenue taken as100%

other components are expressed in term of total revenue. Total Expenses has increased

(96.16%) in the year 2014 compare with previous year it was (87.90). Profit before tax has

decreased (3.84%) in the year 20104 compare with previous year it was (12.15%). Profit after

tax amount decreased (2.59%) during 2014 compare with previous year it was (8.10%). The

common size balance sheet for year 2013-14 the total assets and liabilities are taken as100%

other components are expressed in term of total assets and liabilities. Share capital has

decreased (3.16%) in the year 2010 compare with previous year it was (3.26%).Short-term

borrowings has decreased (67.88%) in the year 2010 compare with previous year it was

(77.74%). Short-term loans and advances decreased (68.17%) in the year 2010 compare with

previous year it was (83.7%)

Trent percentage in Revenue shows in the year 2010 Revenue is 100% whereas in 2014

it is 440.92%. Hence it shows increasing trend and gradual improvement of the organization.

RECOMMENDATION

The company has to increase its gross profit and net profit by reducing their expenses

which in turn will increase the profitability ratio. The company should adopt a better debt equity

mix in the future to control the fluctuations in returns. The company should control fluctuations

in cash and bank balances as it impacts the current ratio of the company.

TABLE OF CONTENTS

Chapter

No. Title

Page

No.

1

INTRODUCTION

1.1 Introduction to the Concept of Study 1

1.2 Theoretical Background of the Study 2

1.3 Review of Literature 10

1.4 Statement of the problem 15

1.5 Objectives of the study 15

1.6 Scope of the study 15

1.7 Methodology 16

1.8 Limitations

16

1.9 Chapter Scheme (Report Structure)

17

2 ORGANIZATION PROFILE

2.1 History of the Organization 18

2.2 Management 21

2.3 Organization structure 22

2.4 Product profile and Market potential 23

2.5 Competitive strength of the company 23

2.6 Description of various functional areas. 25

3 MACRO-MICRO ECONOMIC ANALYSIS

3.1 Macro Analysis 28

3.2 Micro Analysis 30

4 ANALYSIS & INTERPRETATION

5 CONCLUSION

5.1 Findings 75

5.2 Recommendations 78

REFERENCES

LIST OF TABLES

Table

No. Title Page No.

2.1 Board Of Directors 21

3.1 Registered NCFC In India 31

3.2 Major Source Of Funding By NBFCs 31

4.1.1 Current Ratio 33

4.1.2 Quick Ratio 34

4.1.3 Absolute Liquid Ratio 35

4.1.4 Gross Profit Ratio 36

4.1.5 Net Profit Ratio 37

4.1.6 Operating Ratio 38

4.1.7 Operating Profit Ratio 39

4.1.8 Return On Equity Ratio 40

4.1.9 Debt Equity Ratio 41

4.1.10 Proprietary Ratio 42

4.1.11 Capital Gearing Ratio 43

4.2.1 Comparative Income Statement For The Year Ended 2010-11 44

4.2.2 Comparative Balance Sheet For The Year Ended 2010-11 46







4.3.1 Commonsize Income Statement For The Year Ended 2010-11 57

4.3.2 Commonsize Balance Sheet For The Year Ended 2010-11 59







4.4.1 Trend Percentages In Share Capital 70

4.4.2 Trend Percentages In Reserves & Surplus 71

4.4.3 Trend Percentages In Fixed Assets 72

4.4.4 Trend Percentages In Current Liabilities 73

4.4.5 Trend Percentages In Revenue 74

LIST OF CHARTS

Chart

No. Title Page No.

2.1 Organisation Structure 22

3.1 Activities Carried by NBFCs 28

4.1.1 Current Ratio 33

4.1.2 Quick Ratio 34

4.1.3 Absolute Liquid Ratio 35

4.1.4 Gross Profit Ratio 36

4.1.5 Net Profit Ratio 37

4.1.6 Operating Ratio 38

4.1.7 Operating Profit Ratio 39

4.1.8 Return On Equity Ratio 40

4.1.9 Debt Equity Ratio 41

4.1.10 Proprietary Ratio 42

4.1.11 Capital Gearing Ratio 43

4.4.1 Trend Percentages In Share Capital 70

4.4.2 Trend Percentages In Reserves & Surplus 71

4.4.3 Trend Percentages In Fixed Assets 72

4.4.4 Trend Percentages In Current Liabilities 73

4.4.5 Trend Percentages In Revenue 74

1

CHAPTER-1

INTRODUCTION

1.1 INTRODUCTION TO THE CONCEPT OF STUDY

The term ‘financial performance analysis also known as analysis and interpretation of

financial statements’ , refers to the process of determining financial strength and weaknesses of

the firm by establishing strategic relationship between the items of the balance sheet , profit and

loss account and other operative data.

The analysis of financial statements is an important aid to financial analysis. They provide

information on how the firm has performed in the past and what is its current financial position.

Financial analysis is the process of identifying the financial strengths and weakness of the firm

from the available accounting data and financial statements. The analysis is done by establishing

relationship between the different items of financial statements.

The focus of financial analysis is on key figures in the financial statements and the

significant relationship that exists between them. The analysis of financial statements is a process

of evaluating relationship between component parts of financial statements to obtain a better

understanding of the firm’s position and performance.

Investors and customers are keen on reviewing a company financial statement to gauge its

financial strength. Financial institutions are the pillar of the economy, which makes their financial

soundness a top-priority issue not only for the public regulators and investors. Equally important,

review the financial results helps analysts set economically sound firms apart from troubled

institutions.

2

The first task of financial analyst is to select the information relevant to the decision under

consideration from the total information contained in the financial statement. The second step

involved in financial analysis is to arrange the information in a way to highlight significant

relationships. The final step is interpretation and drawing of inferences and conclusions. In brief,

financial analysis is the process of selection, relation, and evaluation.

1.2 THEORETICAL BACKGROUND OF THE STUDY

Financial statement are those statements which exhibits true financial position of the business

for a particular period and also produce the profit earning capacity at the end of a particular period.

Financial statements are prepared for the purpose of presenting periodical review of report on the

progress by the management and deal with, Status of investment in the business

The result achieved during a period under view.

The statements disposing status of investment is known as Balance sheet and statement showing

the result is known as Profit and Loss Account. So the major financial statement are ‘Balance sheet

and Income statement’ (P/L A/c) therefore financial statement are affected by three things i.e.

Recorded facts, Accounting convention and personal Judgment. In short financial statement

position, profitability or weakness of the concern. Thus we can say that financial statement

provide a summary of the accounts of a business enterprise the balance sheet reflecting the assets

and liabilities and income statement showing the results of operation during a certain period.

1.2.1 RATIO ANALYSIS

Ratio analysis is used as a technique of analyzing the financial information, contained in the

balance sheet and profit and loss accounts, for a more meaningful understanding of the financial

position and performance of a firm.

The relationship between two accounting figures, expressed mathematically, is known as a

financial ratio. A ratio helps the analyst to make qualitative judgment about the firm’s financial

position and performance.

3

Several ratios can be calculated from the accounting data contained in the financial

statements. The parties which generally undertake financial analysis is short –term creditors, long-

term creditors, owner and management.

I. LIQUIDITY RATIO

Liquidity Ratios are also termed as Short-Term Solvency Ratios. The term liquidity means

the extent of quick convertibility of assets in to money for paying obligation of short-term nature.

To measure the liquidity of a firm, the following ratios are commonly used:

(a) Current Ratio.

(b) Quick Ratio (or) Acid Test or Liquid Ratio.

(c) Absolute Liquid Ratio (or) Cash Position Ratio.

(a) CURRENT RATIO

Current Ratio establishes the relationship between current Assets and current Liabilities. It

attempts to measure the ability of a firm to meet its current obligations. In order to compute this

ratio, the following formula is used:

Current Assets

Current Ratio =

Current Liabilities

Current ratio is a measure of the firm’s short term solvency. It indicates the availability of

current assets in rupees for every one rupee of current liability. A ratio of greater than one means

that the firm has more current assets than current claims against the, Current ratio of 2 to 1 or more

is considered satisfactory. Current ratio represents a margin of safety for creditors.

4

(b) QUICK RATIO

Quick Ratio also termed as Acid Test or Liquid Ratio. It is supplementary to the current ratio.

The acid test ratio is a more severe and stringent test of a firm's ability to pay its short-term

obligations 'as and when they become due. In order to compute this ratio, the below presented

formula is used:

Liquid Assets

(Current Assets - Stock and Prepaid Expenses)

Liquid Ratio =

Current Liabilities

The ideal Quick Ratio of 1:1is considered to be satisfactory. High Acid Test Ratio is an indication

that the firm has relatively better position to meet its current obligation in time. On the other hand,

a low value of quick ratio exhibiting that the firm's liquidity position is not good.

(c) ABSOLUTE LIQUID RATIO

Absolute Liquid Ratio is also called as Cash Position Ratio (or) Over Due Liability Ratio.

The optimum value for this ratio should be one, i.e., 1: 2. It indicates that 50% worth absolute

liquid assets are considered adequate to pay the 100% worth current liabilities in time. If the ratio

is relatively lower than one, it represents that the company's day-to-day cash management is poor.

If the ratio is considerably more than one, the absolute liquid ratio represents enough funds in the

form of cash to meet its short-term obligations in time. The Absolute Liquid ratio can be calculated

by dividing the total of the Absolute Liquid Assets by Total Current Liabilities. Thus,

Absolute Liquid Assets

Absolute Liquid Ratio =

Current Liabilities

5

II. PROFITABILITY RATIO

The term profitability means the profit earning capacity of any business activity. Thus, profit

earning may be judged on the volume of profit margin of any activity and is calculated by

subtracting costs from the total revenue accruing to a firm during a particular period. Profitability

Ratio is used to measure the overall efficiency or performance of a business. Generally, a large

number of ratios can also be used for determining the profitability as the same is related to sales

or investments.

The following important profitability ratios are below:

(a) Gross Profit Ratio

(b) Net Profit Ratio

(c) Operating Ratio

(d) Operating Profit Ratio

(e) Return on Equity Ratio

(a) GROSS PROFIT

Gross Profit Ratio established the relationship between gross profit and net sales. This ratio

is calculated by dividing the Gross Profit by Sales. It is usually indicated as percentage.

Gross Profit

Gross Profit Ratio = x 100

Net Sales

Gross Profit = Sales - Cost of Goods Sold

Net Sales = Gross Sales - Sales Return (or) Return Inwards

Higher Gross Profit Ratio is an indication that the firm has higher profitability. It also reflects

the effective standard of performance of firm's business.

6

(b) NET PROFIT RATIO

Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio (or) Net Profit

to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the business. Net profit

Ratio is used to measure the relationship between net profit (either before or after taxes) and sales.

This ratio can be calculated by the following formula:

Net Profit after Tax

Net Profit Ratio = x 100

Net Sales

(c) OPERATING RATIO

Operating Ratio is calculated to measure the relationship between total operating expenses

and sales. The total operating expenses is the sum total of cost of goods sold, office and

administrative expenses and selling and distribution expenses. In other words, this ratio indicates

a firm's ability to cover total operating expenses. In order to compute this ratio, the following

formula is used:

Operating Cost

Operating Ratio = x 100

Net Sales

(d) OPERATING PROFIT RATIO

Operating Profit Ratio indicates the operational efficiency of the firm and is a measure of

the firm's ability to cover the total operating expenses. Operating Profit Ratio can be calculated as:

Operating Profit

Operating Profit Ratio = x 100

Net Sales

Operating Profit = Gross Profit - Operating Expenses

7

(e) RETURN ON EQUITY RATIO

This ratio is also called as ROL This ratio measures a return on the owner's or shareholders'

investment. This ratio establishes the relationship between net profit after interest and taxes and

the owner's investment. Usually this is calculated in percentage. This ratio, thus can be calculated

as:

Net Profit (after interest and tax)

Return on Equity Ratio = x 100

Shareholders' Fund (or) Investments

III. SOLVENCY RATIO

The term 'Solvency' generally refers to the capacity of the business to meet its short-term and

Long-term obligations. Solvency Ratio indicates the sound financial position of a concern to

carryon its business smoothly and meet its all obligations. Some of the important ratios which are

given below in order to determine the solvency of the concern:

(a) Debt - Equity Ratio

(b) Proprietary Ratio

(c) Capital Gearing Ratio

(a) DEBT-EQUITY RATIO

This ratio also termed as External - Internal Equity Ratio. This ratio is calculated to

ascertain the firm's obligations to creditors in relation to funds invested by the owners. The ideal

Debt Equity Ratio is 1: 1. This ratio also indicates all external liabilities to owner recorded

claims. It may be calculated as

Total Long Term Debt

Debt-Equity Ratio =

Share Holder’s Fund

8

(b) PROPRIETARY RATIO

This ratio used to determine the financial stability of the concern in general. Proprietary

Ratio indicates the share of owners in the total assets of the company. It serves as an indicator to

the creditors who can find out the proportion of shareholders' funds in the total assets employed

in the business. A higher proprietary ratio indicates relatively little secure position in the event of

solvency of a concern. A lower ratio indicates greater risk to the creditors. A ratio below 0.5 is

alarming for the creditors. It may be calculated as

Shareholders’ Fund

Proprietary Ratio =

Total Assets

(c) CAPITAL GEARING RATIO

This ratio also called as Capitalization or Leverage Ratio. This is one of the Solvency Ratios.

A high capital gearing ratio indicates a company is having large funds bearing fixed interest and/or

fixed dividend as compared to equity share capital. A low capital gearing ratio represents

preference share capital and other fixed interest bearing loans are less than equity share capital. It

can be calculated as shown below:

Equity Share Capital

Capital Gearing Ratio =

Fixed Interest Bearing Funds

9

1.2.2 COMPARATIVE STATEMENT

Comparative balance sheet as on two or more different dates can be used for comparing assets

and liabilities and findings out any increase or decrease in the items.

Comparative Statement provides an idea of financial position at two or more periods.

Generally two financial statements (balance sheet and income statement) are prepared in

comparative form for financial analysis.

The Comparative Statement May Show:-

1. Absolute figures (rupee amounts)

2. Changes in absolute figures i.e. increase or decrease in absolute figures.

3. Absolute data in terms of percentages.

4. Increase or decrease in terms of percentages.

1.2.3 COMMON SIZE STATEMENT

The common-size statements, balance sheet and income statement are show in analytical

percentages. Common size statements indicate the relationship of various items with some

common items. In the income statements, the sales figure is taken as basis and all other figures are

expressed as percentage of sales. Similarly, in the balance sheet the total assets and liabilities is

taken as base and all other figures are expressed as percentage of this total.

10

1.2.4 TREND ANALYSIS

Trend analysis is Very important tool of horizontal financial analysis. This analysis enables

to known the change in the financial function and operating efficiency in between the time

period chosen.

By studding the trend analysis of each item we can know the direction of changes and based

upon the direction of changes, the options can be changed.

Trend =Absolute Value of item in the statement understudy *100

Absolute Value of same item in the base statement

1.3 REVIEW OF LITERATURE

B.Sathish kumar (2008)1, Conducted a study on Evaluation of the financial performance of Indian

private sector banks concluded that Private sector bank plays an important role in development of

Indian economy. After liberalization the banking industry underwent major changes. The

economic reforms totally have changed the banking sectors. RBI permitted new banks to be started

in private sector as per the recommendation of Narashima committee. The Indian banking industry

was dominated by the public banks. But now the situation have changed new generation banks

with the use of technology and professional management has gained a reasonable position in the

banking industry.

1 B. Sathish kumar(2008), article on “Evaluation of the financial performance of Indian private sector banks”, International

journal of motivation, Management and technology, vol.2,No.3,June2011

11

Beaver William H,Correia Maria and McNichols, Maureen. F et.al., (2010)2, Conducted a

study “Financial statement analysis and the prediction of Financial Distress” has analyzed that

Financial including trade suppliers, banks, credit rating agencies, investors and management,

among others. Financial distress refers to the inability of the company to pay its financial

obligations as they mature. Empirically, academic research in accounting and finance has focused

on either bond default or bankruptcy. The basic issue is whether the probability of distress varies

in a significant manner conditional upon the magnitude of the financial statement ratios. This

monograph discusses the evolution of three main streams within the financial distress prediction

literature: The set of dependent and explanatory variables used, the statistical methods of

estimations, and the modeling of financial distress.

SudeepKalakkar(2012)3, Conducted a study on “Key Factors in Determining the Financial

Performance of the Indian Banking Sector” To identified the expected result from the actual result

we have used econometric approach or model using internal financial values such as Return on

Asset, Return on Capital, Income rate growth and Profit per Employee and also used external

factors such as GDP growth rate of 83 scheduled Commercial Banks in three different sectors that

is public sector, private sector and foreign banks operation in India. Along with that we have also

used the financial values and ratios obtained by Reserve Bank of India. Finally we will highlight

the income growth rate will be affected by the market share, Investment to deposit ratio of foreign

banks are efficient compared to public sector banks and private sector banks. Thus foreign banks

have impact in the Indian banking sector with more profits per employee, business per employee,

capital adequacy, low NPA level, Asset Quality, Liquidity etc.

2 Beaver William H,Correia Maria and McNichols, Maureen F (2010), ‘Financial statement analysis and the

prediction of Financial’, Foundations & Trends in Accounting; 2010, Vol.5 Issue 2, p 99-102

3 SudeepKalakkar (2012), “Key Factors in Determining the Financial Performance of the Indian Banking Sector”, The IUP

Journal of Managerial Economics, Vol.4,No.2,pp.56-62, June 2012

12

McGowan Jr. ,Carl B Stambaughan and Andrew.R et.al., (2011)4, Conducted a study on

‘Financial Analysis of Bank Al Bilad’ presents a model for the financial analysis of a bank based

on the Dupont system of financial analysis. The Dupont system of financial analysis is derived

from an analysis of return on equity that consists of three parts: 1) Operating efficiency as

measured by profit margin, 2) Asset use efficiency as measured by total asset turnover, and 3)

Financial leverage as measured by the equity multiplier.

M. Cathy Claiborne and Kirkland A. Wilcox et.al., (2011)5, Conducted a study on “Home

Heaters: A Holistic View of Financial statement” has taken up two start-up companies in the same

industry that have identical economic transactions. Although both companies follow generally

accepted accounting principles (GAAT), each manager makes different choices and estimates

when applying GAAP. By preparing the financial statements, calculating ratios, and comparing

and contrasting the two companies.

Venus C. Ibrara (2009)6, Conducted a study on “Cash flow ratios; Tools for financial analysis”

has stated that according to Statement of financial accounting standards No.95, “ Statement of cash

flow,” the information in the statement, if used with information in other financial statements, can

help investors, creditors and others to assess an entity’s ability to generate positive future net cash

flow, and its ability to meet its obligations and to pay dividends, and determine its needs for

external financing during the period. This study will analyze ratios derived from the operating cash

flows. These ratios are then used to analyze four year of statements of cash flows of three

manufacturing corporations. The objective of the study is to test ratios derived from the statement

of cash flows, use them to evaluate the intra performances of companies t determine said

companies liquidity, efficiency, profitability and ability to protect long-term investors and

creditors. This study will test the usefulness of the ratios, applicability to manufacturing companies

and determine if there are limitations to their uses.

4 McGowan Jr. ,Carl B Stambaughan and Andrew R, (20011), ‘Financial Analysis of Bank Al Bilad’, International Business

& Economical Research Journal; Mar 2011, Vol.10 Issue 3, p 9-16

5M. Cathy Claiborne and Kirkland A. Wilcox (2011), ‘Home Heaters: A Holistic View of Financial statement’, Issues In

Accounting Education, Vol.26, No.4 2011 p 797-806 6 Venus C. Ibrara (2009), ‘Cash flow ratios; Tools for financial analysis’, Journal of International Business

Research, Volume 8, Special Issue1,2009

13

Ehsan.H. Feroz, Sungsoo kim, Raymond L. Raab et.al., (2003)7 Conducted a study on inancial

statement analysis : Data Envelopment approach. In this paper, they demonstrate that Data

Envelopment Analysis (DEA) can augment the traditional ratio analysis. Result reject the null

hypothesis that DEA can provide information to analysts that is additional to that provided by the

traditional ratio analysis.

Jaan Vainu (2002)8, Conducted a study ‘Bank performance analysis: Methodology and Empirical

Evidence’ has discussed that different version of financial ratio analysis are used for the bank

performance analysis using financial statement items as initial data sources. The usage of a

modified version of DuPont financial ratio analysis and a novel matrix approach is discussed n the

article. Empirical results of the Estonian commercial banking system performance analysis are

also presented in the article. Banks performance monitoring, analysis and control needs special

analysis in respect to their operation and performance result from the viewpoint of different

audiences, like investors/owners, regulators, customers/clients and management themselves.

7 Ehsan.H. Feroz, Sungsoo kim, Raymond L. Raab (2003) Conducted a study on “Financial statement analysis : Data

Envelopment approach”,Journal of the Operational Research Society, Vol.54,pp.48-58.

8 Jaan Vainu (2002), ‘Bank performance analysis: Methodology and Empirical Evidence’, Journal of Economic

Literature Classification number 22(2):2009 p 70-84

14

Professor M.R. Kumaraswamy (2009)9, Conducted a study ‘Financial Management cell for New

approach to Ethical-Based Financial statement analysis’ has discussed that today’s business

world has been characterized by moral bankruptcy violating all norms of good business ethics

which, in turn, has caused mounting economic (financial problem) due to frequent company and

bank failures and insolvencies, the result of their engaging in fraudulent (manipulative) deals in as

much as enterprises are started with profit-making motives, the need for a thorough link between

men and profit is something forgotten. Keeping these considerations in view the author 9has

formulated a new approach to financial statement analysis incorporating moral values in business

management.10

Mark T. Soliman (2004)10, In his study ‘Using Industry-Adjusted Dupont Analysis to predict

future Profitability’ has use Dupont analysis that decomposes return-on-net-operating assets

(RNOA) into two multiplicative components: Profit margin and asset turnover, both of which are

largely driven by industry membership. This paper investigates whether using industry-adjusted

Dupont analysis is a useful tool in predicting future changes in RONA. In contrast to prior research

that used economically- wide targets and finds that these components are not useful in forecasting.

9 Professor M.R. Kumara swamy (2009), ‘Financial Management cell for New approach to Ethical-Based

Financial statement analysis’, Journal of Financial Management and Analysis 22(2):2009 p 70-84

10 Mark T. Soliman (2004), ‘Using Industry-Adjusted Dupont Analysis to predict future Profitability’ Graduate

School of Business, Stanford University, Standford

15

1.4 STATEMENT OF THE PROBLEM

Financial performance analysis is very much needed for findings out the efficiency of rising

and utilization of funds in the organization by establishing strategic relationship between the

components of balance sheet and profit and loss statement and other operation data for better

decision making and to maximize the profitability of the organization.

1.5 OBJECTIVES OF THE STUDY

To analyse the liquidity and solvency position of the firm.

To analyse the profitability position of the firm.

To make a comparative study and to prepare a common size statement for the company.

1.6 SCOPE OF THE STUDY

The study is based on the accounting information of the Town Benefit Fund (Kumbakonam)

Limited, Kumbakonam. The study covers the period of 2010 to 2014 for analyzing the financial

statement such as income statements and balance sheet. The scope of the study involves the various

factors that affect the financial efficiency of the company. To increase the profit and sales growth

of the company. This study finds out the operational efficiency of the organization and allocation

of resources to improve the efficiency of the organization. The data of the past five years are taken

into account for the study. The performance is compared within those periods. This study finds out

the areas where Town Benefit Fund (Kumbakonam) Ltd. can improve to increase the efficiency of

its assets and funds employed.

16

1.7 METHODOLOGY

1.7.1 RESEARCH DESIGN

The study is descriptive in nature since it describe about the current financial position of the

company.

1.7.2 METHOD OF DATA COLLECTION

The study uses secondary data source

1.7.3 DATA USED FOR THE STUDY

Data of the Company’s Balance Sheet of the financial years 2009 -10 to 2013-14 were used

in the study.

1.7.4 TOOLS FOR ANALYSIS

The financial and statistical tools used in the study include

Ratio analysis

Comparative statement

Common size statement

Trend Analysis

1.8 LIMITATIONS

Analysis and interpretation are purely based on the figure represented on annual report

The study restricted to a period of 5 years

External factors which affect the financial performance of the concern are not given

importance

17

1.9 CHAPTER SCHEME

Chapter 1: Introduction

This chapter gives an introduction about the research conducted. It deals with the Background

of the study, Review of literature, Statement of the problem, Objectives of the study, Scope of the

study, Research methodology adopted and the Limitation of the study.

Chapter 2: Organizational profile

The chapter organizational profile deals with the history of the organization, the Management,

Departments, Organization structure, Competitive strength of the company, Future plan and the

description about various functional areas.

Chapter 3: Macro Micro Economic Analysis

The chapter macro-micro analysis gives an insight about the industry in global scenario as

well as the Indian scenario.

Chapter 4: Data Analysis and Interpretation

The chapter Analysis and interpretation deals with the analysis of the data collected for the

study.

Chapter 5: Conclusion

This chapter deals with the discussion of the findings and the suggested recommendations

based on the findings and a conclusion to the study.

18

CHAPTER 2

ORGANISATION PROFILE

2.1 HISTORY OF THE ORGANIZATION

Town Benefit Fund was established in 29th 1993 by CA.M.RAMAN in the Temple City of

Kumbakonam, with the blessings of the Makkal Sakthi Movement Founder Dr. M.S.

Udhayamurthi. As a deposit-accepting Non-banking financial company (NBFC).

The primary object of the institution is to cultivate the habit of savings among the members.

The first and foremost aim is to satisfy the member and create mutually among themselves. Apart

from serving the members for the past 20 years, the company conducted various social awareness

programs like (Eye camps, Motivation for the students).

On 31st March 2014 the company mobilized deposits to the tune of Rs.199.27 Crores from

the members and advanced to tune of Rs.144.40 Crores to our members. For the Financial Year

2014-2015 our Company Projected to achieve a total Business of Rs.550 Crores comprising Rs.300

Crores as Deposits and Rs.250 Crores as Advances.

The company though being a mid-sized company believes in adopting state of the art practices

in the areas of corporate governance. The company is an Unlisted Public Limited company

operating in the state of Tamilnadu. Presently 124 permanent employees and 86 temporary

employees were servicing the members through 35 branches.

They have declared dividends constantly for the past 10 years and declared 14% dividend for

the year ended 31 March 2014. Rewarding shareholders with rich cash dividends as well as

ploughing back of profits to support company’s future growth have been that twin objects of the

company over many years.

19

PILLARS OF TOWN BENEFIT FUND (KUMBAKONAM) LIMITED

Reliability

Trust

Openness/Transparency

Commitment

SOME OF THE HIGHLIGHTS ARE

The company has NIL BAD DEBTS for the past 5 years

The company has 100% RECOVERY for the past 5 years

The company’s financial statement do not carry any qualification (Adverse Remark) by the

Auditors

Since inception, the company has not advanced any loan to its Director and persons or firm

or companies referred in the section 295 of the Act.

Since inception, the company has complied with the directives issued by the Reserve Bank

of India and central government as regards to acceptance of deposits. No order has been

passed by the company law board or RBI or any other tribunal u/s 58 AA.

Since inception, no prosecution was initiated against or show causes notices received by

the company for alleged offences under the Act and nc fines and penalties or any other

punishment were imposed on the company.

POLICY

The company covers malpractices and events which have taken place/suspected to take place

involving

Abuse of authority

Breach of contract

Negligence causing substantial and specific danger to public health and safety

20

Financial irregularities, including fraud, or suspected fraud

Criminal offences

VISION

Many May Come And Many May Go But We [TBF (Kumbakonam) Limited] Serve You

For Ever

MISSION

We Imbibe Our Mission “MUTUALITY AMONG HUMANITY” Among Our Member Based

On The Four Pillars Of TBF (Kumbakonam) Limited

Our mutuality philosophy drives us to develop safe and high quality services. Our wide

spread of network helps us get closer to our member.

We focus on building and maintain sound relations with our members and employees and

all other stake holders.

We believe that the success of business comes from each individual’s creativity and team

work.

We at TBF Ltd., stimulate the mutual growth of our members through “Trust and

Responsibility and in this process TBF Ltd., strives to contribute to the development of

overall so city”.

21

2.2 MANAGEMENT

Table No-2.1

BOARD OF DIRECTORS

S.No.

Name

Category

1 B.Mukuntha Ramanujam WTD & Pesident

2 S.R.Sridharan WTD & VP (HR & Admin.)

3 R.Vijayakumar WTD & VP (Business

Development)

4 K.E.B. Rangarajan Director

5 Dr.R.Rajarajeswari Director

6 S.Rajavel Director

7 S.Abai kumar Director

22

2.3 ORGANIZATION STRUCTURE

Chart No 2.1 ORGANIZATION STRUCTURE

FOUNDER

PRESIDENT

VICE PRESIDENT VICE PRESITEND

DIRECTOR

DIRECTOR DIRECTOR

CREDIT

MANAGER

GENERAL MANAGER

OPERATION

MANAGER

HR

MANAGER

FINANCE

MANAGER

23

2.4 PRODUCT PROFILE AND MARKET POTENTIAL

Recurring Deposit Scheme

Children's Educational Saving Scheme

Regular General Lakshadhipathi Scheme

Fixed Deposit And Cumulative Deposit

JEWEL LOAN

MARKET POTENTIAL

Strong presence in the retail segment

Good network

Competitive pricing based on asset age

Customer segment.

2.5 COMPETITIVE STRENGTH OF THE COMPANY

2.5.1 STRENGTHS

High on service aspect

Strong last-mile approach

Focus on recovery

Easy and fast appraisal & disbursements

Able to generate higher yield on assets

Attained critical mass in terms of size

Own employees

24

2.5.2 WEAKNESS

Weak credit history

Weaker risk-management & technology systems

Higher regulatory restrictions

2.5.3 OPPORTUNITIES

Augmentation of capital and leveraging for growth

Large untapped market, both rural & urban and also geographically

Demographic changes and under-penetration

New opportunities in credit card, personal finance, home equity, etc.

Tie-up with global financial sector giants

Blurring gap with banks in terms of cost of funds

Securitisation, to liberate funds to fuel asset growth

2.5.4 THREATS

Weak financial health

High cost of funds

Asset quality deterioration may not only wipe out profits

but also net worth

Entry of foreign players in post-2009 scenario

Growing retail thrust within banks

25

2.6 DESCRIPTION OF FUNCTIONAL AREAS

The various department of the organization includes,

Deposit Section

Accounts Section

Loan Section

Audit Section

2.6.1 Deposits Section

This section concentrates on accepting the deposits from customers. There different types

of deposits available. The money collected from the customers have to be maintained in the

respective accounts and interest has to charged accordingly.

2.6.2 Accounts section

The accounts section focuses on maintaining a clear record on the day transaction that takes

place in the organization. Book keeping is one of the main activity of the account section. It is also

responsible for documenting all the cash inflows and outflows that takes place between the banks.it

should also monitor the reserves deposits and banks performance regularly.

2.6.3 Loan Section

The loan section is said to be the most vital section of the NBFC. It has to sanction loan to

the customers based on their repaying after verifying the necessary documents. However the

amount of loan that can be sanctioned will be decided by the general manager. The information

regarding the payment of interest against the loans has to be maintained and monitored regularly.

26

2.6.4 Audit Section

The audit section is said to be the backbone of the bank.it is responsible for verifying the

vouchers, receipts, invoice and bills etc. in regard to the income and expenses of the NBFC. The

internal audit is conducted once in a month to verify whether all the transactions are done ethically.

A clear explanation has to be given to the internal auditor on any queries in regard with the

transactions. These documents are used as references for the annual audit.

27

CHAPTER 3

MACRO AND MICRO ECONOMIC ANALYSIS

3.1 NON-BANKING FINANCIAL COMPANY (NBFC)

The RBI defines an NBFC as a company registered under the Companies Act, 1956 and

engaged in the business of loans and advances, acquisition of shares, stock, bonds, debentures, and

securities issued by the Global or local government authorities, or other securities of like

marketable nature, leasing, hire-purchase, insurance business, chit business. However, this

excludes institutions whose principal business is in the agricultural or industrial sector, or in the

sale, purchase and construction of immovable property. A non-banking entity that has as its

principal line of business the receipt of deposits, under any scheme or arrangement, or the

extension of loans, in any manner, is also considered an NBFC.

Gradually, NBFCs have become recognized as complementary to the banking sector due to

their customer-oriented services, simplified procedures, attractive rates of return on deposits,

flexibility and timeliness in meeting the credit needs of specified sectors, among other reasons.

NBFCs have traditionally extended credit across the country through their widespread

geographical presence, with NBFCs supplying credit in segments such as equipment leasing, hire

purchase, and consumer finance. These are areas which warrant infusion of financing due to the

existing demand-supply gap. NBFCs have provided a more flexible source of financing and have

been able to disburse funds to a gamut of clientele, from local individual customers to a variety of

corporate clientele. NBFCs can be divided into deposit taking NBFCs, i.e., those which accept

deposits from the public and non-deposit taking NBFCs, i.e., those which do not accept deposits

from the public.

28

The activities carried out by NBFCs can be grouped as follows

Chart No - 3.1

Activities Carried by NBFCs

3.2 GLOBAL SCENARIO OF NBFC

Size of NBFCs Sector and their Growth

In line with the global trend, NBFCs in India too emerged primarily to fill in the gaps in the

supply of financial services which were not generally provided by the banking sector, and also to

complement the banking sector in meeting the financing requirements of the evolving economy.

Over the years NBFCs have grown sizably both in terms of their numbers as well as he

volume of business transactions (RBI, 2014). The number of such financial companies grew more

than seven-fold from 7,063 in 1981 to 51,929 in 1996. Thus, the growth of NBFCs has been rapid,

especially in the 1990s owing to the high degree of their orientation towards customers and

simplification of loan sanction requirements (RBI, 2000). Further, the activities of NBFCs in India

have undergone qualitative changes over the years through functional specialization. NBFCs are

NBFC

Fund Based Activities

Equipment Leasing

Hire Purchase

Bill Discounting

Loans/Investments

Factoring

Equity Participants

Short Term Loans

Inter Corporate Loans

Fee based Activities

Investment Banking

Portfolio Management

Wealth Management

Corporate Consulting

Project Consulting

Loan/Lease Syndication

Advisory Service

29

perceived to have inherent ability and flexibility to take quicker decisions, assume greater risks,

and customize their services and charges according to the needs of the clients. hese features, as

compared to the banks, have tremendously contributed to the proliferation of NBFCs in the eighties

and nineties. Their flexible structures allowed them to unbundle services provided by banks and

market the components on a competitive basis. Banks on the other hand, had all along been known

for their rigid structure, especially the public sector banks. This compelled them carry out such

services by establishing ‘banking subsidiaries’ in the form of NBFCs. The willingness of NBFCs

to engage in varied forms of financial intermediation, hitherto unavailable to the banking system,

has provided the valuable flexibility in financing new areas of business. Though the NBFCs are

different species and smaller in size as a segment when compared with the banking system, their

relevance to the overall economic development and to certain specified areas cannot be

undermined.

Over a period as the regulatory requirements were made progressively stringent, the total

number of NBFCs registered with the Reserve Bank stood at 12,409 by end-March 2013. The

number of NBFCs-D declined considerably with conversion into non-deposit taking companies,

besides closure and mergers of weaker companies. Incidentally, the regulatory regime also seems

to be in favour of reducing the number of deposit taking NBFCs and consequent migration of

depositors towards the banking system which is better regulated and supervised in line with the

global standards.

It may be underlined that the public deposits of NBFCs, after showing a steady increase till

20010, declined thereafter and sharply by end-March 2014. However, the size of total assets, have

grown more than double from Rs. 53,878 crore as at end-March 2001 to Rs. 1,16,897 crore by

end-March 2014, clearly indicating greater demand for the services provided by these companies

in a fast growing economy. The net owned fund (NoF) of NBFCs has also increased sharply

between end-March 2001 and end-March 2014 by more than three times to Rs. 17,975 crore,

showing the strength of the NBFCs segment.

30

3.3 INDIAN SCENARIO OF NBFC

According to the Economic Survey 2012-13, it has been reported that NBFCs as a whole

account for 11.2 per cent of assets of the total financial system. With the growing importance

assigned to financial inclusion, NBFCs have come to be regarded as important financial

intermediaries particularly for the small-scale and retail sectors.

In the multi-tier financial system of India, importance of NBFCs in the Indian financial

system is much discussed by various committees appointed by RBI in the past and RBI has been

modifying its regulatory and supervising policies from time to time to keep pace with the changes

in the system. NBFCs have turned out to be engines of growth and are integral part of the Indian

financial system, enhancing competition and diversification in the financial sector, spreading risks

specifically at times of financial distress and have been increasingly recognized as complementary

of banking system at competitive prices. The Banking sector has always been highly regulated,

however simplified sanction procedures, flexibility and timeliness in meeting the credit needs and

low cost operations resulted in the NBFCs getting an edge over banks in providing funding. Since

the 90s crisis the market has seen explosive growth, as per a Fitch Report1 the compounded annual

growth rate of NBFCs was 40% in comparison to the CAGR of banks being 22% only.

NBFCs have been pioneering at retail asset backed lending, lending against securities,

microfinance etc and have been extending credit to retail customers in under-served areas and to

unbanked customers.

Number of NBFCs registered with the RBI:

The following table shows the number of NBFCs registered with the Reserve Bank of India

and the trend of registration of companies as NBFC since the last decade. The table as given below

also indicates registration of deposit accepting NBFCs of the total NBFCs registered with RBI.

31

Table No - 3.1

Registered NBFCs in India

End June Number of Registered NBFC in India

2009 12,630

2010 12,740

2011 12,809

2012 12,968

2013 13,014

2014 13,261 Source: RBI

Funding sources of NBFCs:

Funding sources of NBFCs include debentures, borrowings from banks and FIs,

Commercial Paper and inter-corporate loans. Table below provides for funding sources of Non-

Banking Financial Companies – Non Deposit Taking – Systematically Important:

Table No - 3.2

Major source funding by NBFCs

S.No. Source of Fund March 2013

(Percentage to total

liability)

March 2014

(Percentage to total

liability)

1 Debentures 21.7 28.3

2 Commercial papers 4.9 4.5

3 Borrowing from banks

and Fin. Institutions 19.8 18.5

4 Inter-corporate loans 5.4 2.8

5 Others 14.1 15.2 Source: RBI Report on Trend and progress of Banks

Banks are also a major source of funding for NBFCs either directly or indirectly. So in a way

NBFCs have a dependence on banks making them vulnerable to systemic risks in the financial

system.

32

Funding by NBFCs:

Historically, banks have played the role of intermediaries between the savers and the

investors. However, in the last few decades, the importance and nature of financial intermediation

has undergone a dramatic transformation the world over. The dependence on bank credit to fund

investments is giving way to raising resources through a range of market based instruments such

as the stock and bond markets, new financial products and instruments like mortgage and other

asset backed securities, financial futures and derivative instruments like swaps and complex

options. Besides transferring resources from savers to investors, these instruments enable

allocation of risks and re-allocation of capital to more efficient use. The increase in the breadth

and depth of financial markets has also coincided with a pronounced shift among the ultimate

lenders who have moved away from direct participation in the financial markets to participation

through a range of intermediaries. These developments in international financial markets have

been mirrored in the financial market in India. NBFCs account for 11.2% of the assets of the total

financial system2. NBFCs have emerged as an important financial intermediary especially in the

small scale and retail sector. There are a total of 12,630 NBFCs (end of June 2013) registered with

RBI consisting of NBFCs-D and NBFCs-ND. Of the 11.2%, asset finance companies held the

largest share of assets of nearly 74.5% and also held the largest share of deposits amongst the

NBFCs-D segment by end of March, 2013.

33

CHAPTER-4

ANALYSIS AND INTERPRETATION

LIQUIDITY RATIO

4.1.1 CURRENT RATIO

Table No 4.1.1 CURRENT RATIO

Year Current Assets Current Liabilities Current Ratio

2009-2010 524482068 513786193 1.02

2010-2011 756609010 743337434 1.02

2011-2012 1023269513 754239108 1.36

2012-2013 1661366540 1378547685 1.21

2013-2014 543591577 1459463172 0.37

Chart No 4.1.1 CURRENT RATIO

It is inferred from the above table that the Current ratio is high (1.36%) in the year 2011-12 and it

is low (0.38%) in the year 2013-14.

2009-10 2010-11 2011-12 2012-13 2013-14

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

YEARS

CU

RR

EN

T R

AT

IO

34

4.1.2 QUICK RATIO

Table No 4.1.2 QUICK RATIO

Year quick asset Current Liabilities Quick Ratio

2009-2010 524482068 513786193 1.02

2010-2011 756522177 743337434 1.02

2011-2012 1020533865 7542239108 0.14

2012-2013 1659571826 1378547685 1.20

2013-2014 537553637 1459463172 0.37

Chart No 4.1.2 QUICK RATIO

It is inferred from the above table that the Quick Ratio is high (1.2) in the year 2012-13 and it is

low (0.14) in the year 2011-12.

2009-10 2010-11 2011-12 2012-13 2013-14

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

YEAR

QU

ICK

RA

TIO

35

4.1.3 ABSOLUTE LIQUID RATIO

Table No 4.1.3 Absolute Liquid Ratio

Year Absolute Liquid Assets Current Liabilities Absolute Liquid Ratio

2009-2010 74028046 513786193 0.14

2010-2011 95462671 743337434 0.13

2011-2012 134799705 754239108 0.18

2012-2013 185230012 1378547685 0.13

2013-2014 537553637 1459463172 0.37

Chart No 4.1.3 Absolute Liquid Ratio

It is inferred from the above table that the Absolute Liquid Ratio is high (0.36) in the year 2013-

14 and it is low (0.13) in the year 2012-13.

0

0.1

0.2

0.3

0.4

AB

LS

OL

UT

E L

IQU

ID R

AT

IO

YEAR

2009-10 2010-11 2011-12 2012-13 2013-14

36

PROFITABILITY RATIO

4.1.4 GROSS PROFIT RATIO

Table No 4.1.4 GROSS PROFIT RATIO

Year Gross Profit Net Sales Gross Profit Ratio

2009-2010 159142 64261734 0.25

2010-2011 8220111 96483112 8.52

2011-2012 9708641 134683787 7.21

2012-2013 28674400 236927939 12.10

2013-2014 10883195 283345806 3.84

Chart No 4.1.4 GROSS PROFIT RATIO

It is inferred from the above table that the Gross Profit Ratio is high (12.10) in the year 2012-13

and it is low (0.25) in the year 2011-12.

0.00

5.00

10.00

15.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

37

4.1.5 NET PROFIT RATIO

Table No 4.1.5 NET PROFIT RATIO

Year Net Profit After Tax Net Sales Net Profit Ratio

2009-2010 3968179 64261734 6.18

2010-2011 5589540 96483112 5.79

2011-2012 16755403 134683787 12.44

2012-2013 19201370 236927939 8.10

2013-2014 7328680 283345806 2.59

Chart No 4.1.5 NET PROFIT RATIO

It is inferred from the above table that the Net Profit Ratio is high (12.44) in the year 2011-12 and

it is low (2.59) in the year 2011-12.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

38

4.1.6 OPERATING RATIO

Table No 4.1.6 OPERATING RATIO

Year Operating Cost Net Sales Operating Ratio

2009-2010 6977295 64261734 10.86

2010-2011 9105311 96483112 9.44

2011-2012 12702917 134683787 9.43

2012-2013 24545809 236927939 10.36

2013-2014 29873816 283345806 10.54

Chart No 4.1.6 OPERATING RATIO

It is inferred from the above table that the Operating Ratio is high (10.86) in the year 2009-10 and


8.50

9.00

9.50

10.00

10.50

11.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

39

4.1.7 OPERATING PROFIT RATIO

Table No 4.1.7 OPRATING PROFIT RATIO

Year Operating Profit Net Sales Operating Profit Ratio

2009-2010 57284439 64261734 89.14

2010-2011 87377801 96483112 90.56

2011-2012 121980870 134683787 90.57

2012-2013 212382130 236927939 89.64

2013-2014 253471990 283345806 89.46

Chart No 4.1.7 OPERATING PROFIT RATIO

It is inferred from the above table that the Operating Profit Ratio is high (90.57) in the year 2011-


88.00

88.50

89.00

89.50

90.00

90.50

91.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

40

4.1.8 RETURN ON EQUITY RATIO

Table No 4.1.8 RETURN ON EQUITY RATIO

Year Net profit After int.& tax Share holder fund Return equity ratio

2009-2010 3968179 26731328 14.84

2010-2011 5589540 36901559 15.15

2011-2012 16755403 56132785 29.85

2012-2013 19201370 94818451 20.25

2013-2014 7328680 101898373 7.19

Chart No 4.1.8 RETURN ON EQUITY RATIO

It is inferred from the above table that the Return on Equity Ratio is high (29.84) in the year

2011-12 and it is low (7.19) in the year 2013-14.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

41

SOLVENCY RATIO

4.1.9 DEBT EQUITY RATIO

Table No 4.1.9 DEBT EQUITY RATIO

Year Total Long Term Debt Shareholders fund Debt-Equity Ratio

2009-2010 16745185 26731328 0.63

2010-2011 239039500 36901559 6.48

2011-2012 268034860 56132785 4.78

2012-2013 274882162 94818451 2.90

2013-2014 554763784 101898373 5.44

Chart No 4.1.9 DEBT EQUITY RATIO

It is inferred from the above table that the Debt Equity Ratio is high (4.48) in the year 2010-11

and it is low (0.62) in the year 2009-10.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

42

4.1.10 PROPRIETARY RATIO

Table No 4.1.10 PROPRIETARY RATIO

Year Share Holders Fund Total Tangible Assets Proprietary Ratio

2009-2010 26731328 16035453 1.67

2010-2011 36901559 36987055 1.00

2011-2012 56132785 49333598 1.14

2012-2013 94818451 70445727 1.35

2013-2014 101898373 86192921 1.18

Chart No 4.1.10 PROPRIETARY RATIO

It is inferred from the above table that the Proprietary Ratio is high (1.68) in the year 2009-10 and


0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

43

4.1.11 CAPITAL GEARING RATIO

Table No 4.1.11 CAPITAL GEARING RATIO

Year Equity Share

Capital

Fixed Interest Bearing

Funds

Capital Gearing

Ratio

2009-2010 15650754 16745185 0.93

2010-2011 23300515 239039500 0.10

2011-2012 30590735 268034860 0.11

2012-2013 57030330 274882162 0.21

2013-2014 66893485 554763784 0.12

Chart No 4.1.11 CAPITAL GEARING RATIO

It is inferred from the above table that the Capital Gearing Ratio is high (0.93) in the year 2009-


0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

2009-10 2010-11 2011-12 2012-13 2013-14

RA

TIO

(IN

PE

RC

EN

TA

GE

)

YEAR

44

4.2 COMPARATIVE STATEMENT

4.2.1 COMPARATIVE INCOME STATEMENT OF TOWN BENEFIT FUND

(KUMBAKONAM) LIMITED FOR THE YEAR ENDED 31.3.2011

INCOME 31/03/2010 31/03/2011

Increase or

Decrease in

Rs

Increase or

Decrease in

%

Interest Earned 63,963,818 96,088,397 32,124,579 50.22

Other Income 297,916 394,715 96,799 32.49

Total 64,261,734 96,483,112 32,221,378 50.14

Expenditure

Interest paid 44,893,825 68,313,404 23,419,579 52.17

Establishment expenses 6,000,673 10,046,738 4,046,065 67.43

Operating Expenses 1,605,256 1,460,588 -

144,668 -9.01

Administration Expenses 5,372,039 7,705,692 2,333,653 43.44

Depreciation 506,805 797,548 290,743 57.37

Total 58,378,598 88,323,970 29,945,372 51.30

Profit Before tax 5,883,136 8,159,142 2,276,006 38.69

Less: Provision for Taxes 1,914,957 2,569,602 654,645 34.19

Profit After Tax 3,968,179 5,589,540 1,621,361 40.86

Opening Balance 2,609,365 3,307,980 698,615 26.77

Amount Available for

Appropriation 6,577,544 8,897,520 2,319,976 35.27

Proposed Dividend +

Dividend Tax 1,541,032 3,069,070 1,528,038 99.16

General Reserve 1,541,032 2,631,932 1,090,900 70.79

Dividend Equalisation &

Charitable Reserves 187,500

-

187,500 -100.00

Total Appropriation 3,269,564 5,701,002 2,431,438 74.37

Surplus Transferred to

Balanced Sheet 3,307,980 3,196,518

-

111,462 -3.37

45

It is inferred from the above table that the comparative income statement for year 2010-11

the total revenue has increased (50.14%) in the year 2011.

Expenses have increased (51.30%) in the year 2011.

Profit before tax has been increased (38.69%) in the year 2011.

Profit after tax amount decreased (40.86%) in the year 2011.

46

4.2.2 COMPARATIVE BALANCE SHEET OF TOWN BENEFIT FUND


I.EQUITY AND

LIABLITES 31/03/2010 31/03/2011

Increase or

Decrease in

Rs

Increase or

Decrease in

%

Share capital 15,650,754 23,300,515 7,649,761 48.88

Reserves & Surplus 11,080,574 13,601,044 2,520,470 22.75

Secured loans - Banks 5,268,008 16,745,185 11,477,177 217.87

Unsecured loans - Deposits 508,364,017 726,261,695 217,897,678 42.86

Deferred Tax Liability 154,168 330,554 176,386 114.41

Total 540,517,521 780,238,993 239,721,472 44.35

II.ASSETS

Application of Funds

Fixed Assets

Gross Block 18,318,985 40,054,764 21,735,779 118.65

Less: Depreciation 2,283,532 3,036,249 752,717 32.96

Net Block 16,035,453 37,018,515 20,983,062 130.85

Current Assets, Loans &

Advances

Cash & Balance with Banks 74,028,046 95,462,672 21,434,626 28.95

Loans & Advances 452,315,647 652,672,004 200,356,357 44.30

Other Current Assets 6,578,483 8,474,334 1,895,851 28.82

Less: Current Liabilities &

Provisions 8,440,108 13,388,532 4,948,424 58.63

Net Current Assets 524,482,068 743,220,478 218,738,410 41.71

Total 1,065,844,352 1,593,327,548 527,483,196 49.49

47

It is inferred from the above table that the comparative balance sheet for the year 2010-11

the share capital has increased (48.88%) in the year 2011

Reserves & Surplus has increased (22.75%) in the year 2011

Current asset has increased (41.71%) in the year 2011

Total assets and liabilities have increased (44.35%) during the year 2011

48



Revenue

Year Ended

March

31,2011

Year Ended

March

31,2012

Increase or

Decrease in

Rs

Increase or

Decrease in

%

I. Revenue from

Operation 96,088,397 133,973,471 37,885,074 39.43

II. Other Income 394,715 710,316 315,601 79.96

TOTAL REVENUE 96,483,112 134,683,787 38,200,675 39.59

Expenses -

III. (a) Employee Benefit

expense 10,046,738 14,822,133 4,775,395 47.53

(b) Finance costs 68,313,404 96,134,533 27,821,129 40.73

© Depreciation and

amortization expense 797,548 1,315,563 518,015 64.95

(d) Administrative and

Other expense 9,105,311 12,702,917 3,597,606 39.51

Total Expenses 88,263,001 124,975,146 36,712,145 41.59

Profit before exceptional

items and tax (I+II-III) 8,220,111 9,708,641 1,488,530 18.11

Exceptional Items 60,969 11,680,434 11,619,465 19057.99

IV. Profit Before Tax 8,159,142 21,389,075 13,229,933 162.15

V. (a) Current Tax 2,393,216 4,066,408 1,673,192 69.91

(b) Deferred tax 176,386 567,264 390,878 221.60

VI. Profit After tax 5,589,540 16,755,403 11,165,863 199.76






49



I.EQUITY AND

LIABLITES

Year Ended

March 31,2013

Year Ended

March 31,2014

Increase or

Decrease in

Rs

Increase or

Decrease in

%

SHARE HOLDER'S

FUNDS

(a) Share Capital 23,300,515 30,590,735 7,290,220 31.29

(b) Reserves and

Surplus 13,601,044 25,542,050 11,941,006 87.79

NON-CURRENT

LIABILITIES -

(a) Long-term

borrowings 239,039,500 268,034,860 28,995,360 12.13

(b) Deferred tax

liabilities 330,554 897,818 567,264 171.61

CURRENT

LIABLITIES -

(a) Short-term

borrowings 503,967,380 741,610,271 237,642,891 47.15

(b) Other current

liabilities 6,878,159 10,656,891 3,778,732 54.94

© Short-term

provisions 1,135,834 1,971,946 836,112 73.61

TOTAL-EQUITY

AND LIABILITIES 788,252,986 1,079,304,571 291,051,585 36.92

II.ASSETS -

NON-CURRENT

ASSETS -

Fixed Assets -

(a) Tangible assets 36,987,055 49,433,598 12,446,543 33.65

(b) Capital work-in-

progress 31,460 1,231,460 1,200,000 3814.37

Non-current

investments - 5,370,000

CURRENT ASSETS -

(a) Inventories 86,833 2,735,648 2,648,815 3050.47

(b) Cash and

equivalents 95,462,671 134,799,705 39,337,034 41.21

© Short-term loans

and advances 652,735,105 880,743,600 228,008,495 34.93

(d) Others current

assets 2,949,862 4,990,560 2,040,698 69.18

TOTAL – ASSETS 788,252,986 1,079,304,571 291,051,585 36.92

50



Short-term borrowings has increased (47.15%) in the year 2012

Short-term loans and advances has increased (34.93%) in the year 2012

Total assets and liabilities have increased (36.92%) during the year 2012

51



Revenue

Year Ended

March

31,2013

Year Ended

March

31,2014

Increase or

Decrease in Rs

Increase or

Decrease in

%

I. Revenue from

Operation 133,973,471 236,123,406 102,149,935 76.25

II. Other Income 710,316 804,533 94,217 13.26

TOTAL REVENUE 134,683,787 236,927,939 102,244,152 75.91

Expenses -

III. (a) Employee

Benefit expense 14,822,133 22,962,334 8,140,201 54.92

(b) Finance costs 96,134,533 159,018,523 62,883,990 65.41

© Depreciation and

amortization expense 1,315,563 1,726,873 411,310 31.26


Other expense 12,702,917 24,545,809 11,842,892 93.23

Total Expenses 124,975,146 208,253,539 83,278,393 66.64


items and tax (I+II-III) 9,708,641 28,674,400 18,965,759 195.35

Exceptional Items 11,680,434 109,073 -

11,571,361 -99.07

IV. Profit Before Tax 21,389,075 28,783,473 7,394,398 34.57

V. (a) Current Tax 4,066,408 8,599,301 4,532,893 111.47

(b) Deffered tax 567,264 982,802 415,538 73.25

VI. Profit After tax 16,755,403 19,201,370 2,445,967 14.60






52



I.EQUITY AND

LIABLITES

Year Ended

March 31,2013

Year Ended

March 31,2014

Increase or

Decrease in

Rs

Increase or

Decrease in

%

SHARE HOLDER'S

FUNDS

(a) Share Capital 30590735 57030330 26439595 86.43

(b) Reserves and

Surplus 25542050 37788121 12246071 47.94

NON-CURRENT

LIABILITIES 0 0.00

(a) Long-term

borrowings 268034860 274882162 6847302 2.55

(b) Deferred tax

liabilities 897818 1429909 532091 59.26

CURRENT

LIABLITIES

(a) Short-term

borrowings 741610271 1360147251 618536980 83.40

(b) Other current

liabilities 10656891 16401834 5744943 53.91

© Short-term

provisions 1971946 1998660 26714 1.35

TOTAL-EQUITY

AND LIABILITIES 1079304571 1749678267 670373696 62.11

II.ASSETS

NON-CURRENT

ASSETS

Fixed Assets

(a) Tangible assets 49433598 70445727 21012129 42.51

(b) Capital work-in-

progress 1231460 - 0.00

Non-cuttent

investments 5370000 17866000 12496000 232.70

CURRENT ASSETS 0.00

(a) Inventories 2735648 1794714 -940934 -34.40

(b) Cash and

equivalents 134799705 185230012 50430307 37.41

© Short-term loans

and advances 880743600 1465742258 584998658 66.42

(d) Others current

assets 4990560 8599556 3608996 72.32

TOTAL - ASSETS 1079304571 1749678267 670373696 62.11

53




Short-term loans and advances has increased (66.42%) in the year 2013

Total assets and liability has increased (62.11%) during the year 2013.

54



Revenue

Year Ended

March

31,2013

Year Ended

March

31,2014

Increase or

Decrease in Rs

Increase or

Decrease in

%

I. Revenue from

Operation 236,123,406 281,641,913 45,518,507 19.28

II. Other Income 804,533 1,703,893 899,360 111.79

TOTAL REVENUE 236,927,939 283,345,806 46,417,867 19.59

Expenses

III. (a) Employee

Benefit expense 22,962,334 30,750,830 7,788,496 33.92

(b) Finance costs 159,018,523 208,897,584 49,879,061 31.37

© Depreciation and

amortization expense 1,726,873 2,940,381 1,213,508 70.27


Other expense 24,545,809 29,873,816 5,328,007 21.71

Total Expenses 208,253,539 272,462,611 64,209,072 30.83


items and tax (I+II-III) 28,674,400 10,883,195

-

17,791,205 -62.05

Exceptional Items 109,073 2,532 -

106,541 -97.68

IV. Profit Before Tax 28,783,473 10,885,727 -

17,897,746 -62.18

V. (a) Current Tax 8,599,301 2,877,578 -

5,721,723 -66.54

(b) deferred tax 982,802 679,469 -

303,333 -30.86

VI. Profit After tax 19,201,370 7,328,680 -

11,872,690 -61.83




Profit before tax has been decreased (-62.18%) in the year 2014.

Profit after tax amount decreased (-61.83%) in the year 2014.

55



I.EQUITY AND

LIABLITES

March

31,2013

March

31,2014

Increase or

Decrease in

Rs

Increase or

Decrease in

%

SHARE HOLDER'S

FUNDS

(a) Share Capital 57,030,330 66,893,485 9,863,155 17.29

(b) Reserves and Surplus 37,788,121 35,004,888 -

2,783,233 -7.37

NON-CURRENT

LIABILITIES -

(a) Long-term borrowings 274,882,162 554,763,784 279,881,622 101.82

(b) Deferred tax liabilities 1,429,909 2,109,378 679,469 47.52

CURRENT LIABLITIES -

(a) Short-term borrowings 1,360,147,251 1,437,940,417 77,793,166 5.72

(b) Other current liabilities 16,401,834 19,055,453 2,653,619 16.18

© Short-term provisions 1,998,660 2,467,302 468,642 23.45

TOTAL-EQUITY AND

LIABILITIES 1,749,678,267 2,118,234,707 368,556,440 21.06

II.ASSETS -

NON-CURRENT ASSETS -

Fixed Assets -

(a) Tangible assets 70,445,727 86,192,921 15,747,194 22.35

Non-current investments 17,866,000 17,990,158 124,158 0.69

CURRENT ASSETS -

(a) Inventories 1,794,714 6,037,940 4,243,226 236.43

(b) Cash and equivalents 185,230,012 537,553,637 352,323,625 190.21

© Short-term loans and

advances 1,465,742,258 1,444,066,062

-

21,676,196 -1.48

(d) Others current assets 8,599,556 26,393,989 17,794,433 206.92

TOTAL – ASSETS 1,749,678,267 2,118,234,707 368,556,440 21.06

56


the share capital funds has increased (17.29%) in the year 2014


Short-term loans and advances has decreased (-1.48%) in the year 2014

Total assets and liability has increased (21.06%) during the year 2014.

57

4.3.1 COMMONSIZE INCOME STATEMENT OF TOWN BENEFIT FUND


PARTICULARS Year Ended March

31,2010

Year Ended March

31,2011

INCOME Amount Percentage

(%) Amount

Percentage

(%)

Interest Earned 63,963,818 99.54 96,088,397 99.59

Other Income 297,916 0.46 394,715 0.41

Total 64,261,734 100.00 96,483,112 100.00

Expenditure

Interest paid 44,893,825 69.86 68,313,404 70.80

Establishment expenses 6,000,673 9.34 10,046,738 10.41

Operating Expenses 1,605,256 2.50 1,460,588 1.51

Administration Expenses 5,372,039 8.36 7,705,692 7.99

Depreciation 506,805 0.79 797,548 0.83

Total 58,378,598 90.85 88,323,970 91.54

Profit Before tax 5,883,136 9.15 8,159,142 8.46

Less: Provision for Taxes 1,914,957 2.98 2,569,602 2.66

Profit After Tax 3,968,179 6.18 5,589,540 5.79

Opening Balance 2,609,365 4.06 3,307,980 3.43

Amount Available for Appropriation 6,577,544 10.24 8,897,520 9.22

Proposed Dividend + Dividend Tax 1,541,032 2.40 3,069,070 3.18

General Reserve 1,541,032 2.40 2,631,932 2.73

Dividend Equalisation & Charitable

Reserves 187,500 0.29 0.00

Total Appropriation 3,269,564 5.09 5,701,002 5.91

Surplus Transferred to Balanced

Sheet 3,307,980 5.15 3,196,518 3.31

58

It is inferred from the above that the common size income statement for year 2010-11 the

total revenue taken as100% other components are expressed in term of total revenue.

Total Expenses has increased (91.54%) in the year 2011 compare with previous year it

was (90.85%)

Profit before tax has increased (9.15%) in the year 2010 compare with previous year it

was (8.46)

Profit after tax amount decreased (6.18%) during 2010 compare with previous year it

was (5.79%)

59

4.3.2 COMMONSIZE BALANCE SHEET OF TOWN BENEFIT FUND


PARTICULARS Year Ended March 31,2010 Year Ended March

31,2011

I.EQUITY AND LIABLITES Amount Percentage

(%) Amount

Percentage

(%)

Share capital 15,650,754 2.90 23,300,515 2.99

Reserves & Surplus 11,080,574 2.05 13,601,044 1.74

Secured loans - Banks 5,268,008 0.97 16,745,185 2.15

Unsecured loans - Deposits 508,364,017 94.05 726,261,695 93.08

Deferred Tax Liability 154,168 0.03 330,554 0.04

Total 540,517,521 100.00 780,238,993 100.00

II.ASSETS

Application of Funds

Fixed Assets

Gross Block 18,318,985 1.72 40,054,764 2.51

Less: Depreciation 2,283,532 0.21 3,036,249 0.19

Net Block 16,035,453 1.50 37,018,515 2.32

Current Assets, Loans &

Advances

Cash & Balance with Banks 74,028,046 6.95 95,462,672 5.99

Loans & Advances 452,315,647 42.44 652,672,004 40.96

Other Current Assets 6,578,483 0.62 8,474,334 0.53

Less: Current Liabilities &

Provisions 8,440,108 0.79 13,388,532 0.84

Net Current Assets 524,482,068 49.21 743,220,478 46.65

Total 1,065,844,352 100.00 1,593,327,54

8 100.00

60

It is inferred from the above table that the common size balance sheet for year 2010-11

the total assets and liabilities are taken as100% other components are expressed in term

of total assets and liabilities.

Share capital has increased (2.99%) in the year 2011 compare with previous year it

was (2.90%)

Reserves & Surplus has decreased (1.74%) in the year 2011 compare with previous year it

was (2.05%)

Current assets decreased (46.65%) in the year 2011 compare with previous year it was

(49.21%)

61




31,2011

Year Ended March

31,2012

Revenue Amount Percentage

(%) Amount

Percentage

(%)

I. Revenue from Operation 96,088,397 99.59 133,973,47

1 99.47

II. Other Income 394,715 0.41 710,316 0.53

TOTAL REVENUE 96,483,112 100.00 134,683,78

7

Expenses

III. (a) Employee Benefit expense 10,046,738 10.41 14,822,133 11.01

(b) Finance costs 68,313,404 70.80 96,134,533 71.38

© Depreciation and amortization

expense 797,548 0.83 1,315,563 0.98

(d) Administrative and Other expense 9,105,311 9.44 12,702,917 9.43

Total Expenses 88,263,001 91.48 124,975,14

6 92.79

Profit before exceptional items and tax

(I+II-III) 8,220,111 8.52 9,708,641 7.21

Exceptional Items 60,969 0.06 11,680,434 8.67

IV. Profit Before Tax 8,159,142 8.46 21,389,075 15.88

V. (a) Current Tax 2,393,216 2.48 4,066,408 3.02

(b) deferred tax 176,386 0.18 567,264 0.42

VI. Profit After tax 5,589,540 5.79 16,755,403 12.44




was (91.48%)

Profit before tax has increased (15.88%) in the year 2012 compare with previous year it

was (8.46%)

Profit after tax amount increased (12.44%) during 2012 compare with previous year it

was (5.79%)

62




31,2011 Year Ended March 31,2012


(%) Amount

Percentage

(%)

SHARE HOLDER'S FUNDS

(a) Share Capital 23,300,515 2.96 30,590,735 2.83

(b) Reserves and Surplus 13,601,044 1.73 25,542,050 2.37

NON-CURRENT LIABILITIES

(a) Long-term borrowings 239,039,500 30.33 268,034,860 24.83

(b) Deferred tax liabilities 330,554 0.04 897,818 0.08

CURRENT LIABLITIES

(a) Short-term borrowings 503,967,380 63.93 741,610,271 68.71

(b) Other current liabilities 6,878,159 0.87 10,656,891 0.99

© Short-term provisions 1,135,834 0.14 1,971,946 0.18

TOTAL-EQUITY AND

LIABILITIES 788,252,986 100.00 1,079,304,571 100.00

II.ASSETS

NON-CURRENT ASSETS

Fixed Assets

(a) Tangible assets 36,987,055 4.69 49,433,598 4.58

(b) Capital work-in-progress 31,460 0.00 1,231,460 0.11

Non-cuttent investments - 5,370,000 0.50

CURRENT ASSETS

(a) Inventories 86,833 0.01 2,735,648 0.25

(b) Cash and equivalents 95,462,671 12.11 134,799,705 12.49

© Short-term loans and advances 652,735,105 82.81 880,743,600 81.60

(d) Others current assets 2,949,862 0.37 4,990,560 0.46

TOTAL - ASSETS 788,252,986 100.00 1,079,304,571 100.00

63




Share capital decreased (2.83%) in the year 2010 compare with previous year it

was (2.96)

Short-term borrowings has increased (68.71%) in the year 2010 compare with previous year

it was (63.93%)

Short-term loans and advances decreased (81.60%) in the year 2010 compare with previous

year it was

(82.81%)

64




31,2012

Year Ended March

31,2013


(%) Amount

Percentage

(%)

I. Revenue from Operation 133,973,471 99.47 236,123,406 99.66

II. Other Income 710,316 0.53 804,533 0.34

Total Revenue 134,683,787 100.00 236,927,939 100.00

Expenses


(b) Finance costs 96,134,533 71.38 159,018,523 67.12


expense 1,315,563 0.98 1,726,873 0.73


Total Expenses 124,975,146 92.79 208,253,539 87.90


(I+II-III) 9,708,641 7.21 28,674,400 12.10

Exceptional Items 11,680,434 8.67 109,073 0.05


V. (a) Current Tax 4,066,408 3.02 8,599,301 3.63

(b) Deferred tax 567,264 0.42 982,802 0.41




Total Expenses has decreased (87.90%) in the year 2013 compare with previous year it

was (92.79)

Profit before tax has decreased (12.15%) in the year 2013 compare with previous year it

was (15.88%)


was (12.44%)

65



PARTICULARS Year Ended March 31,2012 Year Ended March 31,2013


(%) Amount

Percentage

(%)


(a) Share Capital 30,590,735 2.83 57,030,330 3.26




(b) Deferred tax liabilities 897,818 0.08 1,429,909 0.08

CURRENT LIABLITIES

(a) Short-term borrowings 741,610,271 68.71 1,360,147,251 77.74



TOTAL-EQUITY AND

LIABILITIES 1,079,304,571 100.00 1,749,678,267 100.00

II.ASSETS

NON-CURRENT ASSETS

Fixed Assets


(b) Capital work-in-progress 1,231,460 0.11 -

Non-cuttent investments 5,370,000 0.50 17,866,000 1.02

CURRENT ASSETS

(a) Inventories 2,735,648 0.25 1,794,714 0.10


© Short-term loans and advances 880,743,600 81.60 1,465,742,258 83.77


TOTAL - ASSETS 1,079,304,571 100.00 1,749,678,267 100.00

66




Share capital has increased (3.26%) in the year 2013 compare with previous year it

was (2.83%)

Short-term borrowings has increased (77.74%) in the year 2013 compare with previous year

it was (68.71%)

Short-term loans and advances increased (83.77%) in the year 2013 compare with previous

year it was (81.60%)

67




31,2013

Year Ended March

31,2014


(%) Amount

Percentage

(%)

I. Revenue from Operation 236,123,406 99.66 281,641,913 99.40

II. Other Income 804,533 0.34 1,703,893 0.60

Total Revenue 236,927,939 100.00 283,345,806 100.00

Expenses


(b) Finance costs 159,018,523 67.12 208,897,584 73.73


expense 1,726,873

0.73 2,940,381 1.04


Total Expenses 208,253,539 87.90 272,462,611 96.16


(I+II-III) 28,674,400

12.10 10,883,195 3.84

Exceptional Items 109,073 0.05 2,532 0.00


V. (a) Current Tax 8,599,301 3.63 2,877,578 1.02

(b) Deffered tax 982,802 0.41 679,469 0.24





was (87.90)

Profit before tax has decreased (3.84%) in the year 20104 compare with previous year it

was (12.15%)


was (8.10%)

68



PARTICULARS Year Ended March 31,2013 Year Ended March 31,2014


(%) Amount

Percentage

(%)


(a) Share Capital 57,030,330 3.26 66,893,485 3.16




(b) Deferred tax liabilities 1,429,909 0.08 2,109,378 0.10

CURRENT LIABLITIES

(a) Short-term borrowings 1,360,147,251 77.74 1,437,940,417 67.88



TOTAL-EQUITY AND

LIABILITIES 1,749,678,267 100.00 2,118,234,707 100.00

II.ASSETS

NON-CURRENT ASSETS

Fixed Assets


Non-cuttent investments 17,866,000 1.02 17,990,158 0.85

CURRENT ASSETS

(a) Inventories 1,794,714 0.10 6,037,940 0.29


© Short-term loans and advances 1,465,742,258 83.77 1,444,066,062 68.17


TOTAL - ASSETS 1,749,678,267 100.00 2,118,234,707 100.00

69




Share capital has decreased (3.16%) in the year 2010 compare with previous year it

was (3.26%)

Short-term borrowings has decreased (67.88%) in the year 2010 compare with previous year

it was (77.74%)

Short-term loans and advances decreased (68.17%) in the year 2010 compare with previous

year it was (83.7%)

70

4.4 TRENT ANALYSIS

4.4.1 TREND PERCENTAGES IN SHARE CAPITAL

Table No 4.4.1 TREND PERCENTAGES IN SHARE CAPITAL

Year Amount Trent %

Increase/Decrease

Base Year Previous Year

2010 15650754 100.00 0.00 0.00

2011 23300515 148.88 48.88 48.88

2012 30590735 195.46 95.46 46.58

2013 57030330 364.39 264.39 168.93

2014 66893485 427.41 327.41 63.02

Chart No 4.4.1 TREND PERCENTAGES IN SHARE CAPITAL

The above table shows in the year 2010 share capital is 100% whereas in 2014 it is

427.41%. Hence it shows increasing trend and gradual improvement of the organization.

0

50

100

150

200

250

300

350

400

450

2010 2011 2012 2013 2014

TR

EN

D %

YEAR

71

4.4.2 TREND PERCENTAGES IN RESERVES & SURPLUS

Table No 4.4.2 TREND PERCENTAGES IN RESERVES & SURPLUS

Year Amount Trent %

Increase/Decrease


2010 11080574 100 0 0

2011 13601044 122.75 22.75 22.75

2012 25542050 230.51 130.51 107.77

2013 37788121 341.03 241.03 110.52

2014 35004888 315.91 215.91 -25.12

Chart No 4.4.2 TREND PERCENTAGES IN RESERVES & SURPLUS

Reserves & surplus shown an increasing trend in the period 2013.

The Reserves & surplus was showing decreasing trend in the period 2010.

0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014

TR

EN

T %

YEAR

72

4.4.3 TREND PERCENTAGES IN FIXED ASSETS

Table No 4.4.3 TREND PERCENTAGES IN FIXED ASSETS

Year Amount Trent %

Increase/Decrease


2010 16035453 100 0 0

2011 36987055 230.66 130.66 130.66

2012 49433598 308.28 208.28 77.62

2013 70445727 439.31 339.31 131.04

2014 86192921 537.51 437.51 98.20

Chart No 4.4.3 TREND PERCENTAGES IN FIXED ASSETS

Fixed Assets shown an increasing trend in the period 2014.

The Fixed Assets was showing decreasing trend in the period 2010.

2010

2011

2012

2013

2014

0

200

400

600

Trent %

YE

AR

TR

EN

DT

%

2010 2011 2012 2013 2014

73

4.4.4 TREND PERCENTAGES IN CURRENT LIABILITIES

Table No 4.4.4 TREND PERCENTAGES IN CURRENT LIABILITIES

Year Amount Trent %

Increase/Decrease


2010 513786193 100 0 0

2011 743337434 144.68 44.68 44.68

2012 754239108 146.80 46.80 2.12

2013 1378547685 268.31 168.31 121.51

2014 1459463172 284.06 184.06 15.75

Chart No 4.4.4 TREND PERCENTAGES IN CURRENT LIABILITIES

Current Liabilities shown an increasing trend in the period 2014.

The Current Liabilities was showing decreasing trend in the period 2010.

0

50

100

150

200

250

300

TR

EN

T %

YEAR

2010 2011 2012 2013 2014

74

4.4.5 TREND PERCENTAGES IN REVENUE

Table No 4.4.5 TREND PERCENTAGES IN REVENUE

Year Amount Trent %

Increase/Decrease


2010 64261734 100 0 0

2011 96483112 150.14 50.14 50.14

2012 134683787 209.59 109.59 59.45

2013 236927939 368.69 268.69 159.11

2014 283345806 440.92 340.92 72.23

Chart No 4.4.5 TREND PERCENTAGES IN REVENUE

The above table shows in the year 2010 Revenue is 100% whereas in 2014 it is 440.92%.

Hence it shows increasing trend and gradual improvement of the organization.

0

50

100

150

200

250

300

350

400

450

2010 2011 2012 2013 2014

TR

EN

T %

YEAR

75

CHAPTER -5

CONCLUSION

5.1 FINDINGS AND RECOMMENDATIONS

5.1.1 FINDINGS

Current ratio is high (1.36%) in the year 2011-12 and it is low (0.38%) in the year 2013-

14.

Quick Ratio is high (1.2) in the year 2012-13 and it is low (0.14) in the year 2011-12.

Absolute Liquid Ratio is high (0.36) in the year 2013-14 and it is low (0.13) in the year

2012-13.

Gross Profit Ratio is high (12.10) in the year 2012-13 and it is low (0.25) in the year 2011-

12.

Net Profit Ratio is high (12.44) in the year 2011-12 and it is low (2.59) in the year 2011-

12.

Operating Ratio is high (10.86) in the year 2009-10 and it is low (9.43) in the year 2011-

12.

Operating Profit Ratio is high (90.57) in the year 2011-12 and it is low (89.14) in the year

2009-10.

Return on Equity Ratio is high (29.84) in the year 2011-12 and it is low (7.19) in the year

2013-14.

Debt Equity Ratio is high (4.48) in the year 2010-11 and it is low (0.62) in the year 2009-

10.

PROPRIETARY RATIO is high (1.68) in the year 2009-10 and it is low (0.10) in the year

2009-10

Capital Gearing Ratio is high (0.93) in the year 2009-10 and it is low (0.09) in the year

2010-11.


(50.14%) in the year 2011. Expenses have increased (51.30%) in the year 2011. Profit

before tax has been increased (38.69%) in the year 2011. Profit after tax amount decreased

(40.86%) in the year 2011.

76

The comparative balance sheet for the year 2010-11 the share capital has increased

(48.88%) in the year 2011. Reserves & Surplus has increased (22.75%) in the year

2011.Current asset has increased (41.71%) in the year 2011.Total assets and liabilities have

increased (44.35%) during the year 2011.




(199.76%) in the year 2012.


(31.29%) in the year 2012. Short-term borrowings has increased (47.15%) in the year

2012.Short-term loans and advances has increased (34.93%) in the year 2012.Total assets

and liabilities have increased (36.92%) during the year 2012.




(14.60%) in the year 2013.


(86.43%) in the year 2013. Short-term borrowings has increased (83.40%) in the year 2013.

Short-term loans and advances has increased (66.42%) in the year 2013. Total assets and

liability has increased (62.11%) during the year 2013.



before tax has been decreased (-62.18%) in the year 2014. Profit after tax amount decreased

(-61.83%) in the year 2014.

The comparative balance sheet for the year 2013-14 the share capital funds has increased

(17.29%) in the year 2014. Short-term borrowings has increased (5.72%) in the year 2014.

Short-term loans and advances has decreased (-1.48%) in the year 2014. Total assets and

liability has increased (21.06%) during the year 2014.

The common size income statement for year 2010-11 the total revenue taken as100% other

components are expressed in term of total revenue. Total Expenses has increased (91.54%)

in the year 2011 compare with previous year it was (90.85%) Profit before tax has increased

77

(9.15%) in the year 2010 compare with previous year it was (8.46). Profit after tax amount

decreased (6.18%) during 2010 compare with previous year it was (5.79%).

The common size balance sheet for year 2010-11 the total assets and liabilities are taken

as100% other components are expressed in term of total assets and liabilities. Share capital

has increased (2.99%) in the year 2011 compare with previous year it was (2.90%).

Reserves & Surplus has decreased (1.74%) in the year 2011 compare with previous year it

was (2.05%). Current assets decreased (46.65%) in the year 2011 compare with previous

year it was (49.21%)



in the year 2012 compare with previous year it was (91.48%) Profit before tax has increased

(15.88%) in the year 2012 compare with previous year it was (8.46%).Profit after tax

amount increased (12.44%) during 2012 compare with previous year it was (5.79%)



decreased (2.83%) in the year 2010 compare with previous year it was (2.96). Short-term

borrowings has increased (68.71%) in the year 2010 compare with previous year it was

(63.93%). Short-term loans and advances decreased (81.60%) in the year 2010 compare

with previous year it was (82.81%)


components are expressed in term of total revenue. Total Expenses has decreased (87.90%)

in the year 2013 compare with previous year it was (92.79). Profit before tax has decreased

(12.15%) in the year 2013 compare with previous year it was (15.88%). Profit after tax

amount decreased (8.10%) during 2013 compare with previous year it was (12.44%)



has increased (3.26%) in the year 2013 compare with previous year it was (2.83%) Short-

term borrowings has increased (77.74%) in the year 2013 compare with previous year it

was (68.71%). Short-term loans and advances increased (83.77%) in the year 2013

compare with previous year it was (81.60%)

78



in the year 2014 compare with previous year it was (87.90). Profit before tax has decreased

(3.84%) in the year 20104 compare with previous year it was (12.15%). Profit after tax

amount decreased (2.59%) during 2014 compare with previous year it was (8.10%)



has decreased (3.16%) in the year 2010 compare with previous year it was (3.26%).Short-

term borrowings has decreased (67.88%) in the year 2010 compare with previous year it

was (77.74%). Short-term loans and advances decreased (68.17%) in the year 2010

compare with previous year it was (83.7%)

Trent percentage in share capital in the year 2010 share capital is 100% whereas in 2014 it

is 427.41%. Hence it shows increasing trend and gradual improvement of the organization.

Trent percentage in Reserves & surplus shown an increasing trend in the period 2013. The

Reserves & surplus was showing decreasing trend in the period 2010.

Trent percentage in Fixed Assets shown an increasing trend in the period 2014. The Fixed

Assets was showing decreasing trend in the period 2010.

Trent percentage in Current Liabilities shown an increasing trend in the period 2014. The

Current Liabilities was showing decreasing trend in the period 2010.

Trent percentage in Revenue shows in the year 2010 Revenue is 100% whereas in 2014 it

is 440.92%. Hence it shows increasing trend and gradual improvement of the organization.

5.1.2 RECOMMENDATION

The company has to increase its gross profit and net profit by reducing their expenses which

in turn will increase the profitability ratio.

The company can adopt a better debt equity mix in the future to control the fluctuations in

returns.

The company should control fluctuations in cash and bank balances as it impacts the

current ratio of the company.

79

REFERENCES

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