liberty shoes (finance)
DESCRIPTION
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A
PROJECT REPORT
ON
“ANALYSIS OF FINANCIAL
STATEMENT OF
LIBERTY SHOES LIMITED”
Submitted in partial fulfillment of the requirement for the award of
Master’s of Business Administration (MBA)
Submitted by: Under the guidance of:
_________________ ____________________
MBA – 3rd SEMESTER
BHARATI VIDYAPEETH INSTITUTE OF MANAGEMENT & RESEARCH,
NEW DELHIAn ISO 9001:2008 Certified Institute
NAAC Accredited Grade “A” UniversityRanked in Top 50 B – schools in India by Business India
CRISIL Grading MBA ProgrammeA * - National Level, A ** - State level
Recipient of B – school leadership award from star newsACKNOWLEDGEMENT
This project would not be completed today if it was not for the help and support
that I received throughout its development and completion. First and foremost, I
would like to express my deepest appreciation and gratitude to my mentor in the
company _____________ for her good will, time, devotion, guidance and help
during the realization of this project. Thank you. These times were exceptional to
me and I have learned a great deal. Special Thanks to my parents who taught me
to work hard in life; it made me what I am today.
Finally, I would like to express gratitude all those who have contributed to the
achievement of this work.
Thank you
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PREFACE
LIBERTY shoes Ltd. Is the only Indian company that is among the top five
manufacturers of leather footwear in the world with a turnover exceeding US $100
million. This report is all about study of Inventory Management of Liberty shoes
Ltd. In this, I studied annual reports of different years of Liberty shoes Ltd.
My objective is to study Financial Analysis of Liberty shoes Ltd. With the
help of Ratio Analysis. For this report, research design used is exploratory
research design. Exploratory research design main purpose is to formulate a
problem for more precise investigation.
In this, I define clearly what I want to measure and employ adequate
method for measuring it. Data is collected from annual reports of different years
of Liberty shoes Ltd., manual, websites and books.
The study contains certain limitations because enough data was not
available but all the efforts have been made to collect the relevant information
through the source available.
The Company is highly dependent on external debt, which bring in
inflexibility in company’s operation. But still the company is in stronger position
because the profits have increased with sales.
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TABLE OF CONTENT
Particulars Page No.
Acknowledgement
Preface
INTRODUCTION
RESEARCH METHODOLOGY
CONCEPTUAL DISCUSSION
DATA ANALYSIS
Findings & Recommendations
Conclusion
Bibliography
Questionnaire
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CHAPTER-1
INTRODUCTION
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LIBERTY SYMBOL
INTRODUCTION TO FOOTWEAR INDUSTRY
Footwear is a man made outer covering of foot. It is genially made out of leather
but the same can be made with synthetic material. When the human being came
into existence, they were needed to protect themselves from heat, cold dampness,
dust and roughness of ground while walking, standing, or even running. So they
innovate shoes for the protection of their feet.
The importance of footwear is highly recognized in western and other advanced
countries, so the footwear industry grew in full swing that originated big
companies like Nike, Reebok, Gucci, and Addidas etc. But the scenario in India is
somewhat different and regretfully as the industry could not develop itself despite
the fact that India being second largest populated country in the world, surplus
manpower and resource of raw material, whatever the reason being.
Till the mid of 20th century, the bulk of shoe industry was in cottage sector.
Professional cobblers were responsible for production of every type of shoes. But
in the past one decade the situation has completely changed because new
generation of professionals did not adopt this line as shoemaker and preferred to
join white-collar jobs.
It resulted in the diversification from schedule caste to other class of people as
industrial workers. Up to eighties, Bata was the main source of supply of footwear
to the cites and towns with higher standard of living. But taking into consideration
the growing standard of living and demand, many new footwear companies came
into light like Liberty,Corona, Action, Lakhani etc. Production of footwear at this
movement is mainly at Agra, Karnal, Faridabad, Delhi, Kolkatta, Kanpur,
Mumbai, Madras, and Banglore etc.
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Footwear industry in India can never be a heavy industry in general and small
entrepreneurs with small investments in machinery and capital could remain for
all purposes the backbone of industry. It is the ideal industry for entrepreneurs
without much of investment in the industry assuring growing demand and profits.
Availability of raw material and manpower is not a problem. So the small sector
has to play a vital role in industry development.
Depending upon the styles, type and purpose, the footwear can be broadly
classified into three groups:
Chappal or open type footwear.
Sandal or strap attached footwear.
Boot & shoe or closed type footwear covering most part of the feet.
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COMPANY INFORMATION
Board of Directors
Adesh gupta CEO & Executive Director
Shammi bansal Executive Director
Adarsh Gupta Executive Director
Harish Kumar goel Director(Law & Taxation)
Sunil bansal Director
Amitabh Taneja Independent Director
Prem Chand Garg Independent Director
Raghu Goel Independent Director
Siddharth Sanghi Independent Director
Surendra Kumar Arya Independent Director
Vivek Bansal Independent Director
Audit committee
Sunil Bansal
Prem Chand Garg
Raghu Dayal
Vivek Bansal
Share transfer committee
Adarsh Gupta
Sunil Bansal
Prem Chand Garg
Remuneration/Selection Committee
Raghu Dayal
Prem Chand Garg
Membership & certificate
Confederation of India industry (CII)
Federation of India chambers of commerce & industry (FICCI)
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PHD chamber of commerce and industry (PHDCCI)
The associated chambers of commerce and industry of India
(ASSOCHAM)
Federation of Indian export organization (FIEO)
Council for leather export (CLE)
ISO 9001
Company secretary & Vice President
Munish kakra
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GROUP DATA AT A GLANCE
Year of Establishment 1954
Employment More than 5000 employees
Business Investment US $ 100 Million
Status of Business Flagship company of the Group, Liberty Shoes Ltd., a public
limited company listed in all major stock exchanges of India.
Present Activities Second largest footwear manufacturer in the country having
fully integrated plants to manufacture various kind of
footwear with Annual Production of over 10 million pairs.
Annual Turnover Over US$ 125 Million
Brand Equity Mother Brand LIBERTY is ranked among Top 100 brands
in the country. Other 10 Successful National brands, known
for its respective segment of footwear
Infrastructure Various plants spread over 200 acres of land in and around
Karnal, Libertypuram, Gharaunda in Haryana, Dehradun &
Roorkee in Uttarakhand, Pounta Sahib in Himachal Pradesh
supported by strong Marketing Network having
14 Branch offices
02 Overseas offices
300 Liberty Exclusive Distributors
350 Liberty Exclusive Retail Stores
20 Overseas showrooms
Export Markets All over the world, mainly with Europe in
Germany
United Kingdom
France
Spain
Hungary
Technology Liberty’s patented technology “HUMANTECH” is a
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combination of human craftsmanship and technological
excellence with following technologies available in the
world for Footwear Industry.
Cemented Construction
Direct PVC Injection
Direct PU Injection
Direct EVA Injection
Direct TPU Injection
INTRODUCTION
Liberty Group, come a long way since it began its operations a little over 50 years
ago in the cityof Karnal, Haryana. The emphasis since the very beginning has
been to offer “great products at value for money / affordable prices”. This led to
the development of Liberty Patented “HUMANTECH” approach which
synergise traditional workmanship with state of the art technology to provide the
best quality at the most competitive price.
Liberty group companies, set various benchmarks in Footwear Manufacturing
within the Group’s Production facilities and also to Industry.
HISTORY:
Liberty Group started operation in 1954 and today comprises of five firms,
namely Liberty Footwear Company, Liberty Enterprises, Liberty Leathers, Liberty
Group marketing Division and Liberty Shoes Limited. The group has an annual
turnover of Rs.500 Crores approximately. Liberty has its own studio for design
and development of footwear. It manufactures footwear both for export and
domestic markets. The company has carved a name for itself in the international
market and is India’s largest exporter of footwear to Germany.
Liberty Shoes Limited, the public company of the group started commercial
production in 1993 and is the country’s leading footwear manufactures today. The
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company has state of the art production facilities at Libertypuram to manufacturer
high quality footwear and its contribution in Liberty Group’s total sale is over
30% and it’s rising steadily.
CORPORATE PHILOSPHY:
Steeped in a philosophy that has at its core innovation, technology and
advancement, we, at Liberty, pride ourselves over and above everything else on
our healthy and heart-felt respect for the human ethos. That which projects itself
in the expectancy and excitement with which one greets the arrival of the new
combined with a sincere and deep regard for the old. That which is appreciative of
and adopts at every stage the unique balance between modernization and
tradition.”
Liberty as a brand is constantly evolving to keep pace with the changing trends,
styles, beliefs and aspirations of people while maintaining the sanctity of certain
traditions like workmanship and good value.
CORPORATE SAGA:
With people as its leitmotif, Liberty has for over 50 years always stayed in touch
with the aspirations of every successive generation even as it developed the largest
range in the industry catering to every income bracket and age segment. Using the
patented 'Humantech' approach that combines the best of talent with the latest in
technology. From the price-conscious, value for money seeking buyer to the
trendy, global, price-indifferent customer, from the with it all attitude teenager to
the conservative seen it all adult just about everybody today finds a good reason
for being in Liberty. Liberty is today consolidating and expanding its following
which extends from the fashion alleys to the sidewalks with styles that
compliment the newest most happening trends and also by turning footwear
selling into a byword for personalized service in an ambience and shoe stations in
India and abroad.
THE CREDO:
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To ensure that the method we use is the latest technology world-over.
To follow the highest standard of honest workmanship in whatever we make.
To walk that extra miles to ensure customer satisfaction worldwide.
To remain a true cosmopolitan to the spirit.
To remain a great corporation to associate with, to work for, to know that:
“We Are About People”.
LIBERTY RANGE:
The family brand style personified with something for every need. Be it formal or
casual, at office or at the beach, a conference or a soiree - Liberty fits in
effortlessly.
MANUFACTURING:
What gives Liberty the edge is vertically integrated manufacturing infrastructure
on technology basis with completely in-house state of the art production facilities
which includes 8 DESMA machines for PU Direct Injection, 15 Machines for
PVC Direct Injection, 3 Machines for EVA Injection, 3 PU Injection units for unit
sole, six lines for cement lasted injection and one machine for the latest TPU
Injection. Above production facilities are maintained with focus on environment
cleanliness ISES 2000 norms, provides a complete range of family footwear of all
seasons and occasions, covers the entire domain of industrial safety and health
footwear requirements.
Liberty also has the ISO: 9001-2000 certification for its Quality, Management
System, a testimony to all the system and procedures in place.
Liberty is a technology driven company ‘HUMANTECH’ – Liberty’s patented
technology is combination of human craftsmanship and technological excellence.
Liberty has production facilities at the following locations:
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Gharaunda, Haryana, (Approx.95 K.M. from Delhi)
Libertypuram, Haryana (Approx.102 K.M. from Delhi)
Karnal, Haryana, (Approx.124 from Delhi)
Satiwala, Pounta Sahib, Himachal Pradesh (Approx 225 K.M. from Delhi)
Batamandi, Paunta Sahib, Himachal Pradesh (Approx 229 K.M. from Delhi)
Dehradun, Uttranchal (Approx. 300 K.M. from Delhi)
Roorkee, Uttranchal (Approx. 150 K.M. from Delhi)
GROUP COMPANIES:
Liberty Retail Revolutions Limited Liberty Retail Revolutions Limited, the company behind the Revolutions store is
a 100% subsidiary of Liberty Shoes Limited
The company is producing more than 50,000 pairs of footwear a day covering
virtually every age group and income category. Products are marketed across the
globe through 150 distributors, 350 exclusive showrooms and over 6000 multi-
brand outlets, and sold in thousands every day in more than 25 countries including
fashion-driven, quality-obsessed nations like France , Italy , and Germany.
Setting new benchmarks in the retail business in India Liberty Retail Revolutions
caters to the aspirations of the style-driven in India with an exclusive chain of
upmarket showrooms, Revolutions Concept Stores, at fashion centres across India.
It’s a concept that has opened new frontiers in retail selling - never seen before
fashion hubs, catering to individual styles and looks, in an ambience as magical
and exciting as the products lined up – a world class range in footwear fashion and
accessories.
Liberty Whiteware Limited
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The newest member of the Liberty Group introduced a range of ceramic sanitary
ware and accessories of European design that’s inspired by a lifestyle of sheer
elegance. Where beauty and functionality achieve perfect harmony. Form
compliments finesse. And tradition blends seamlessly into innovation. Produced at
a Rs.50 crore state-of-the-art plant at Neemrana Industrial Area of Rajasthan the
Beach range of fine bathroom products and accessories including WCs, bidets,
washbasins, and shower trays, comprising five distinctive collections each with its
own definitive character and style.
BRANDS
This family brand is style personified with something for every need. Be it formal
or casual, at office or at the beach, a conference or a soiree Liberty fits in
effortlessly.
COOLERS
They’re cool and they’re hot. They’re hap and
they’re happening. Perfect for those hot summer
days. When the sun blisters and the heat strokes,
they keep the feet cool and comfortable. But
why limit the pleasure to summers?! Here’s one
brand of sandals that stays cosy and comfy all
year round.
FOOTFUN
Something for those little feet as they learn to
walk. Airy, light and comfortable with lycra
uppers and no laces. In fairy-tale colors and
designs.
FORCE-10
The flair, the style and ease that forces the world
to take notice. A happening range of sports
shoes in far out colors that provides the perfect
footnote to a head-turning presence.
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FORTUNE
Genuine leather uppers and extra light poly soles
help complete the power dressing in men with
élan and panache.
GLIDERS
Cool and comfortable, trendy and with it. A range of
stunning brogues and smart lace ups that will be
noticed and talked about every step of the way.
Unmistakably a part of Generation You.
SENORITA
Walk tall, walk light and walk with amazing style.
Rediscover the little girl that lurks not far behind in
every woman, laughing and loving every moment of
life.
TIPTOPP
It’s what Mrs. Junejas of the world love to be seen in.
Strappy styles and comfortable heels. And colors that
become the envy of all and sundry. Perfect for
conquering the neighbourhood in designs that are the
latest rage the world over.
WARRIOR
Smart, stylish professional gear crafted from leather
uppers and direct injection P.U. soles with steel toe
caps and offering the widest range of styles in safety
shoes. To master the art of being confident and sure-
footed on slippery grounds and danger ones.
WINDSOR
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The premium is on lightness, style and comfort
which makes it ideal for men who take every
challenge effortlessly in their stride.
FREEDOM
A new introduction in the safety footwear segment in Nitrile PVC
material, offering customers with waterproof, fire retardant and
shock free product in economic range. A safety footwear for
industrial use.
RESEARCH & DEVELOPMENT:
Our 2-way channel partners dig their feed back deep and constantly. Hammering
String of creative workman at the manufacturing center to produce not just
faceless shows dancing down conveyor belts but shoes with character. So the
centers have poled 53 years of the research and continuous flow of emotions to
redefine the R & D center at Libertypuram. Fusing technology with the sweat of
sagacity. Some call it Research & Development Wing some put a price to
investments in the “Emotional Technology“ that it comes out as. We call the
process HUMANTECH and it priceless.
Liberty also very active in the area of Research & Development and has a number
of “firsts” to its credit like:
1. Liberty pioneered the PU (Polyurethane) technology in India in footwear
industry in 1982 and today is the largest producers of footwear with this
technology in Asia.
2. Liberty has developed new material TPE (Thermo-Plastic-Elastomer) for high
quality formal footwear.
3. Liberty has developed a high quality Eva Compound for beach footwear.
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4. Liberty was the first company commissioning a latest CAD/ CAM System.
5. Die Less Leather cutting machine which is directly attached with its Design &
Development Section for speedy process of development of new models of
footwear.
6. Liberty is the only factory in India having water proofing technology approved
by SYMPATEX, a name known for water proofing technology worldwide.
7. Liberty Management is very thin in size comparing with a huge work force in
front line operation.
DESIGN & DEVELOPMENT:
Liberty has well established state of the art design centers which are constantly
engaged in designing and developing latest trend setting footwear for the young
fashions conscious Indian consumers. On an average 4000 new styles are
developed every year out of which roughly 1200 styles are selected and
introduced in the market in two seasons i.e. spring / summer and fall, winter.
FINANCIAL
If you think a company that has helped 50 million people think on their feet in
style is big stuff, you have seen very little yet. For us the future plans are not
something that can be termed as crystal gazing but neatly enclosed ideas idea and
deliverables in continuum. We are fast building new brands and products,
improving the all times favorites and expending our marketing infrastructure and
honing to our skills to further the delight of the consumer. With an over all 25%
boom planned each year for the next 5 year you could says that India is only true
blue footwear manufacturing multinational is just peaking over the edge.
DISTRIBUTION NETWORK:
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We have distribution network rivals the human arterial system. An reticulate
network of retailer showrooms, and exclusive outlets with a reach like blue –
green marine octopus a structured 2-way feeder-feed back system that both gives
and receives an organization of our size would have gone out-of-orbit without a
firm support system. Thanks to the vision and drive of our corporate think tank,
we now have a sales network that brings the breath-taking world of super
footwear right at your feet within seconds. A virtual room service at zero cost, if
you will. A marketing system that we have conceived and created, it is
understandably, the envy of competition.
MORE STORES FROM LIBERTY:
Liberty group is expecting to add Rs.70 crores from its footwear retail business.
The company will invest Rs.7 Crores towards expending “Revolution” - its
exclusive footwear showroom. This year company will add 10 more stores to take
it to 25. The company has also entered the manufacturing of white ware segment
of sanitary and bathroom products. Liberty is looking at introducing new design
this season too. The company has expended its retail presence in over 100 stores
across small and big cities.
LIBERTY PLANS TO EXPANDS GLOBAL PRESENCE
Liberty group has also establish manufacturing plant in Uttrakhand state and
opening 25 exclusive outlets across the country as well as in 7 overseas centers.
Each outlet is estimated to see an investment of Rs.7.5 million.
With a turnover of Rs.500 crores the company is emerging as an multinational
brands with about 350 Exclusive distributors all over the world. “as opposed to the
earlier model of expending retail outlets we plan to bring down the number of
retailer from 5000 to 4000. We do not want retail presence for name shake; the
ideas to have real brand presence”, Liberty plans to open super premium at
Singapore, Kualampur, Dhaka, Columbo and Dubai . The currently exports about
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25% of footwear production to Germany, Italy, France, United States and the
Middle East.
STRENGTH:
At Liberty we upgrade and re-engineer our design every 6 months so that you
have something new, with it and futuristic every time you visit us. Our shoes are
much more than just B.E. Witching leather work. We understand that a shoe for
you is an extension of your personality. And for one who keeps moving onto to
stables of desire loaded with exciting world fashions trends we craft the dreams
with the help of Capital Fashion Technologists shut away not in dream bars but
with their heart minds on the pules of future fashion.
LIBERTY SHOES LIMITED
“AN INNER VIEW”
LOCATION:The company has entered into a lease agreement for 410 cannals and 17 marlas
(248500sq. yards) of land on national highway no.1 main G.T. road in
Libertypuram, Kutail, district Karnal.
The site is around 115 KM from Delhi on national highway between Chandigarh
and Delhi. The site is 15KM from Karnal and is well connected with major cities
and has all basis infrastructure facilities.
BUILDING:It mainly consists of eight huge halls meant for manufacturing operation facility,
raw material and finished goods storage, cutting sections, PVC Sole Section, PU
Sole Section, Administrative Block etc. the design and finishing of building is
among the best.
The total area of the building is 170 lacks sq.feet (approx) and total cost of
building is around 550 lacks. The building is of RC framed structure.
MACHINARY:
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Five (new technology) injection-moulding machines are being used by the
company for production purpose. All the machines are imported from Italy and
Germany. Production of shoes as well as quality of shoes has been increased and
problems of pasting, sole cracking have been reduced substantially by this
technology. Recently one new computerized machine has been purchased for
cutting leather. It has also been imported from Italy
INNOVATIVE APPROACHES:
Entire production units of Liberty are interlinked by SAP, a unique ERP Solution
implemented for the first time in India in a Footwear Industry with all modules
related with Finance, Logistics & supply chain.
It is rare to see such clean, state of the art production facility in India with
following management systems and tools.
1. KAIZEN is implemented since 2000 and in practice throughout the
organization.
2. 5 S Concept is introduced and in practice since 2001 and presently in
matured stage. The impact of 5 S implementation is visible in all dept. and
shop floors of the organization. We may even consider these units are the
model units for any Footwear Industry
3. LEAN awareness is existing in all production floors of the organisation.
Value streams are standardized for most of the regularly produced articles.
Now the Group is in the process of integrating Lean Concept with PP
Module of SAP for controlling the flow.
4. ISO 9001:2000 CERTIFICATION is awarded to QMS of one of its units
and Group is in the process of getting for other units. Group is having an
appointed MR exclusively for monitoring the Quality System. DNV is the
Certifying agency and auditors of the QMS
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5. WASTE MANAGEMENT SYSTEM is established in one of their unit and
it is a pilot project. Wastage Identification, handling and disposal are
documented and monitored by frequent internal audits.
6. WATER MANAGEMENT SYSTEM is existing in the group. Water
wastage is almost –nil- and water is re-cycled in most of their operations.
8. ISES-2000 norms are followed to ensure the best Social, Health and
Environmental Standards. This standard is monitored by Indo German
Export Promotion Council of India.
9. Liberty is the Committee member for setting the standard for Safety Shoes.
The recently released IS: 15298:2000 for Safety shoes is followed by
Liberty and it is the first in Shoe Industry have applied for Certification to
use ISI Mark.
9. ENGERGY MANAGEMENT SYSTEM of Liberty is unique in Footwear
Industry. Liberty Units have got lot of incentives / discounts from Haryana
State Electricity Board for maintaining maximum Power Factor.
INTERNATIONAL EXPERIENCE:
1. Liberty has more than 25 years of experience in Export Business and enjoying
Status Holder status as “Recognized Export House” of India. In 80’s when
Soviet Market was invaded by Indian Exporters, Liberty was the Market
Leader in USSR.
2. Liberty is having its own office in Russia and Hungary for more than 2
decades.
3. Liberty’s major operations are mainly with Europe, Middle East, East African,
South African countries and USA.
4. Major brands of Europe, SALAMANDER, JELA, DEICHMANN, ROMIKA
and USA brands like TODDWELSH are selling only Liberty Shoes under
their brand umbrella.
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CONTRIBUTION TO INDUSTRY:
1. Liberty has pioneered in bringing PU Technology to India. Liberty has given a
presentation on Footwear foot prints for the future in Asia Pacific Customer
Conference 2000 organized by Huntsman Polyurethane at Singapore on this
technology.
2. SYMPATEX is a patented technology on Water Proofing recognized world
wide. Liberty is the only company in India having recognition/approval of
SYMPATEX on Waterproofing.
3. Safety Shoes are brought to Indian Market for the first time and an exclusive
brand WARRIOR was launched by Liberty in Industrial Segment shoes. Our
safety shoes are meeting all DIN / EN standards in respective segments.
4. PU technology was introduced to Government Sector, Liberty has set the
standard as member of the BIS Committee. BIS Standard IS: 15298: 2000,
applicable for Safety shoes is the Standard on which Liberty is producing
Safety shoes for more than one decade.
5. Liberty Enterprises is the model unit for above Standard and complete testing
facility is available only with Liberty in India after FDDI.
6. Liberty is the First Footwear Manufacturing facility in India awarded with the
latest ISO 9001:2000 Certification.
7 The first and only footwear Industry in India, having SAP ERP with all
modules related to
Inward/Outward supply chain, Materials, Finance and Costing
8. Liberty has pioneered blend of NITRILE Rubber with PVC in 1996 to make it
more versatile for cold countries usage.
9. Liberty has developed new material TPE (Thermo Plastic Elastomer) for high
quality formal footwear. This material has better properties than PVC or TPR
conventionally
used for formal.
10. Liberty is expanding its operation by manufacturing non woven hags which
are environment clean.
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SOCIAL CONTRIBUTION:
1. Liberty Footwear Training Institute formed by our Directors is developing
the local public as technicians of Footwear Industry.
2. Management of Liberty Sponsors the children of Liberty Employees for
higher studies, gives training and employment after graduation in FDDI.
3. Social and Environmental Standard ISES-2000 is in practice with Liberty.
This standard is being monitored by Indo German Export Promotion
Project in India.
4. The products being used by Liberty are Eco-friendly and providing latest
technology to Industry when Indian Markets related with Environment &
Safety are not even aware about the new standards and technology.
NATIONAL AND INTERNATIONAL AWARDS Leather Export Promotion Merit Award (1975), till 1982.
Haryana Government Export Award (1978-79).
International Asian Award, Jakarta (1982).
European Awards, Paris (1987).
National Award for best Export of Leather Garments (1987-88).
International Award for Good Quality, Brussels, Belgium (1988).
Leather Export Award for Government of India (1991-92).
National Productivity Award from president (1997).
Council of Leather Export (CLE), India’s apex body of leather products
exporters, during the international leather fair held at Chennai, conferred is
highest award the “DOYEN OF INDUSTRY” upon Mr.P.D.Gupta on 5th
Feb., 98.
Worldwide Prestige Award (WPA)-2001.
CORPORATE GOALS Liberty wants to develop a spirit of cooperation between individuals &
group within the company.
Liberty wants to attain & maintain good relations between its union &
management.
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Liberty will endeavor to keep highly qualified employees by appropriate
training and thus raise their morale & competence.
Liberty will try to practice management of highest standard of competence
& professionalism.
Liberty will strive to remain or become the technological as well as market
leaders in footwear industry and leather product industry.
Liberty wants to be known for the quality for its products & services.
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CHAPTER-2
RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
Research is an important pre-requisite for a dynamic organization to be précised.
Research is more systematic activity directed towards the discovery and
development of organized body of knowledge. Some of the characteristics of
research methodology are as follows:
1. Research is directed towards a solution of problem. It may attempt to
answer a question or determine the relation between two or more variables.
2. Research involves gathering new data for primary of first hand sources or
using existing data for new purposes.
3. Research is based on observable experience or empirical evidence.
4. Research strives to be objective and logical applying every possible test to
validate the proceed are employed the data collection and conclusion
research.
Primary Data
Information collected for the specific purpose at hand or specifically for the
currently undertaken.
Secondary Data
Information that already exists somewhere, have been collected for another
purpose.
I used secondary data for this project. I refer some books and also some websites
for the project. These books and websites are mentioned in the bibliography.
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OBJECTIVE OF THE STUDY
Main Objective
The project is designed to give an overview of Inventory Management.
Sub Objective
The study on Inventory is very important for a firm. The objectives of this
study are as follows:
To determine the changes in the Inventory position of the company.
To determine the increase or decrease in Inventory level.
To determine the various ratios for analyzing the Inventory level of the
company.
To spot out strengths & weakness of business.
To determine the absolute figures for the last two years
SCOPE OF THE STUDY
This report covers:
1) Credit Administration at LIBERTY SHOES
2) Various types of Bank Finance
3) Term Loans Financing
4) Working Capital Financing
5) Appraisal Process of Term Loans and Working Capital
6) Post Sanction Processes
7) Case Study describing actual appraisal of a Term Loan proposal and a
Working Capital Financing Proposal.
Data Collection
This report is based on primary as well secondary data, however primary data collection
was given more importance since it is overhearing factor in attitude studies. One of the
most important users of research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an alternative solution to
the problem .It also helps in collecting the vital information that is required by the top
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management to assist them for the better decision making both day to day decision and
critical ones.
1. DATA SOURCES:
(A)Primary Data
Primary data are those, which were collected afresh & for the first
time and thus happen to be original in character. However, there are many
methods of collecting the primary data. All have not been used for the
purpose of this project. The ones that have been used are:
Face to face (Interviewing)
Observation
(B) Secondary Data
When an investigator uses the data that has been already collected by others is
called secondary data. The secondary data could be collected from the journals,
reports and various publications. The advantage of the secondary data can be
economical, both in the terms of money and time spent. In this report secondary
data was collected through:
Company balance sheets
Reports and records
Flow charts and tables
Websites
Primary data was collected through questionnaires
Sample size : 20
Sample area : New Delhi
Sample method : Random sampling method
Duration of Study:
The study was carried out for a period of two months, from 6TH OCT 2011
to 30 Nov 2011.
29
Sampling:
(A)Sampling procedure:
The sample was selected of them who are the customers/visitors of Infosys It
was also collected through personal visits to persons, by formal and informal talks
and through filling up the questionnaire prepared. The data has been analyzed by
using mathematical/Statistical tool.
Secondary source of data
1. Reports from the clients
2. Old data of existing clients
LIMITATIONS
Although every effort have been made to collect the relevant information through
the source available, still some relevant information could not be gathered.
1. The time duration could not provide ample opportunity to study every
detail of management in the company.
2. There are restrictions not to visit some specific areas.
3. The concered executives were having very busy schedule.
4. The company on account of confidential reports has not disclosed some
figures
5. Estimates are based upon predictions.
30
CHAPTER-3
CONCEPTUAL DISCUSSION
31
CONCETUAL DISCUSSION
Literature Review
Financial statements refer to such statements which contains financial information
about an enterprise. They report profitability and the financial position of the
business at the end of accounting period. The team financial statement includes at
least two statements which the accountant prepares at the end of an accounting
period. The two statements are: -
The Balance Sheet
Profit And Loss Account
They provide some extremely useful information to the extent that balance Sheet
mirrors the financial position on a particular date in terms of the structure of
assets, liabilities and owners equity, and so on and the Profit and Loss account
shows the results of operations during a certain period of time in terms of the
revenues obtained and the cost incurred during the year. Thus the financial
statement provides a summarized view of financial position and operations of a
firm
Meaning of Financial Analysis
The first task of financial analysis is to select the information relevant to the
decision under consideration to the total information contained in the financial
statement. The second step is to arrange the information in a way to highlight
significant relationship. The final step is interpretation and drawing of inference
and conclusions. Financial statement is the process of selection, relation and
evaluation.
Features of Financial Analysis
To present a complex data contained in the financial statement in simple and
understandable form.
To classify the items contained in the financial statement inconvenient and
rational groups.
32
To make comparison between various groups to draw various
conclusions.
Purpose of Analysis of financial statements
To know the earning capacity or profitability.
To know the solvency.
To know the financial strengths.
To know the capability of payment of interest & dividends.
To make comparative study with other firms.
To know the trend of business.
To know the efficiency of mgt.
To provide useful information to mgt
Procedure of Financial Statement Analysis
The following procedure is adopted for the analysis and interpretation of
financial statements:-
The analyst should acquaint himself with principles and postulated of
accounting. He should know the plans and policies of the managements that he
may be able to find out whether these plans are properly executed or not.
The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is find out. Earning capacity of the enterprise then analysis
of income statement will be undertaken. On the other hand, if financial
position is to be studied then balance sheet analysis will be necessary.
The financial data be given in statement should be recognized and rearranged.
It will involve the grouping similar data under same heads. Breaking down of
individual components of statement according to nature. The data is reduced to
a standard form. A relationship is established among financial statements with
the help of tools & techniques of analysis such as ratios, trends, common size,
fund flow etc.
The information is interpreted in a simple and understandable way. The
significance and utility of financial data is explained for help indecision
making.
The conclusions drawn from interpretation are presented to the management in
the form of reports.
33
Analyzing financial statements involves evaluating three characteristics of a
company: its liquidity, its profitability, and its insolvency. A short-term creditor,
such as a bank, is primarily interested in the ability of the borrower to pay
obligations when they come due. The liquidity of the borrower is extremely
important in evaluating the safety of a loan. A long-term creditor, such as a
bondholder, however, looks to profitability and solvency measures that indicate
the company’s ability to survive over a long period of time. Long-term creditors
consider such measures as the amount of debt in the company’s capital structure
and its ability to meet interest payments. Similarly, stockholders are interested in
the profitability and solvency of the company. They want to assess the likelihood
of dividends and the growth potential of the stock.
Comparison can be made on a number of different bases.
Following are the three illustrations:
34
Ratio Analysis:
Meaning of Ratio Analysis:
Ratio analysis is the method or process by which the relationship of items or
group of items in the financial statement are computed, determined and presented.
Ratio analysis is an attempt to derive quantitative measure or guides concerning
the financial health and profitability of business enterprises. Ratio analysis can be
used both in trend and static analysis. There are several ratios at the disposal of an
analyst but their group of ratio he would prefer depends on the purpose and the
objective of analysis.
While a detailed explanation of ratio analysis is beyond the scope of this section,
we will focus on a technique, which is easy to use. It can provide you with a
valuable investment analysis tool.
This technique is called cross-sectional analysis. Cross-sectional analysis
compares financial ratios of several companies from the same industry. Ratio
analysis can provide valuable information about a company's financial health. A
financial ratio measures a company's performance in a specific area. For example,
you could use a ratio of a company's debt to its equity to measure a company's
leverage. By comparing the leverage ratios of two companies, you can determine
which company uses greater debt in the conduct of its business. A company whose
leverage ratio is higher than a competitor's has more debt per equity. You can use
this information to make a judgment as to which company is a better investment
risk. However, you must be careful not to place too much importance on one ratio.
You obtain a better indication of the direction in which a company is moving
when several ratios are taken as a group.
35
Objective of Ratios:
Ratios are worked out to analyze the following aspects of business
organization-
A) Solvency-
Long term
Short term
Immediate
B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources
H) Leverage or external financing
Forms of Ratio:
Since a ratio is a mathematical relationship between two or more variables /
accounting figures, such relationship can be expressed in different ways as follows
–
A) As a pure ratio:
For example the equity share capital of a company is Rs. 20, 00,000 & the
preference share capital is Rs. 5, 00,000, the ratio of equity share capital to
preference share capital is 20, 00,000: 5, 00,000 = 4:1.
B) As a rate of times:
In the above case the equity share capital may also be described as 4 times that of
preference share capital. Similarly, the cash sales of a firm are Rs. 12,00,000 &
credit sales are Rs. 30,00,000. So the ratio of credit sales to cash sales can be
described as
2.5 (30, 00,000/12, 00,000) = 2.5 times are the credit sales that of cash sales.
36
C) As a percentage:
In such a case, one item may be expressed as a percentage of some other items.
For example, net sales of the firm are Rs.50, 00,000 & the amount of the gross
profit is Rs. 10, 00,000, then the gross profit may be described as 20% of sales
(10, 00,000/50, 00,000)
Steps in Ratio Analysis
The ratio analysis requires two steps as follows:
1) Calculation of ratio
2) Comparing the ratio with some predetermined standards. The standard ratio
may be the past ratio of the same firm or industry’s average ratio or a projected
ratio or the ratio of the most successful firm in the industry. In interpreting the
ratio of a particular firm, the analyst cannot reach any fruitful conclusion unless
the calculated ratio is compared with some predetermined standard. The
importance of a correct standard is oblivious as the conclusion is going to be
based on the standard itself.
1) Liquidity ratios:
It shows the relationship between the current assets & current liabilities of the
concern e.g. liquid ratios & current ratios.
2) Leverage ratios:
It shows the relationship between proprietors funds & debts used in financing the
assets of the concern e.g. capital gearing ratios, debt equity ratios, & Proprietary
ratios.
3) Activity ratios:
It shows relationship between the sales & the assets. It is also known as Turnover
ratios & productivity ratios e.g. stock turnover ratios, debtors’ turnover ratios.
4) Profitability ratios:
It shows the relationship between profits & sales e.g. operating ratios,
gross profit ratios, operating net profit ratios, expenses ratios
37
It shows the relationship between profit & investment e.g. return on
investment, return on equity capital.
5) Coverage ratios:
It shows the relationship between the profit on the one hand & the claims of the
outsiders to be paid out of such profit e.g. dividend payout ratios & debt service
ratios.
Based on User
1) Ratios for short-term creditors:
Current ratios, liquid ratios, stock working capital ratios
2) Ratios for the shareholders:
Return on proprietors fund, return on equity capital
3) Ratios for management:
Return on capital employed, turnover ratios, operating ratios, expenses ratios
4) Ratios for long-term creditors:
Debt equity ratios, return on capital employed, proprietor ratios.
38
Importance of Ratio Analysis:
As a tool of financial management, ratios are of crucial significance. The
importance of ratio analysis lies in the fact that it presents facts on a comparative
basis & enables the drawing of interference regarding the performance of a firm.
Ratio analysis is relevant in assessing the performance of a firm in respect of the
following aspects:
1) Liquidity position
2) Long-term solvency
3) Operating efficiency
4) Overall profitability
5) Inter firm comparison
6) Trend analysis
1) Liquidity position
With the help of Ratio analysis conclusion can be drawn regarding the liquidity
position of a firm. The liquidity position of a firm would be satisfactory if it is
able to meet its current obligation when they become due. A firm can be said to
have the ability to meet its short-term liabilities if it has sufficient liquid funds to
pay the interest on its short maturing debt usually within a year as well as to repay
the principal. This ability is reflected in the liquidity ratio of a firm. The liquidity
ratio is particularly useful in credit analysis by bank & other suppliers of short
term loans.
2) Long-term solvency
Ratio analysis is equally useful for assessing the long-term financial viability of a
firm. This respect of the financial position of a borrower is of concern to the long-
term creditors, security analyst & the present & potential owners of a business.
The long-term solvency is measured by the leverage/ capital structure &
profitability ratio analysis s that focus on earning power & operating efficiency.
Ratio analysis reveals the strength & weaknesses of a firm in this respect. The
leverage ratios, for instance, will indicate whether a firm has a reasonable
proportion of various sources of finance or if it is heavily loaded with debt in
39
which case its solvency is exposed to serious strain. Similarly the various
profitability ratios would reveal whether or not the firm is able to offer adequate
return to its owners consistent with the risk involved.
3) Operating efficiency
Yet another dimension of the useful of the ratio analysis, relevant from the
viewpoint of management, is that it throws light on the degree of efficiency in
management & utilization of its assets. The various activity ratios measure this
kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate
analysis, dependent upon the sales revenues generated by the use of its assets-
total as well as its components.
4) Overall profitability
Unlike the outsides parties, which are interested in one aspect of the financial
position of a firm, the management is constantly concerned about overall
profitability of the enterprise. That is, they are concerned about the ability of the
firm to meets its short term as well as long term obligations to its creditors, to
ensure a reasonable return to its owners & secure optimum utilization of the assets
of the firm. This is possible if an integrated view is taken & all the ratios are
considered together.
5) Inter firm comparison
Ratio analysis not only throws light on the financial position of firm but also
serves as a stepping-stone to remedial measures. This is made possible due to inter
firm comparison & comparison with the industry averages. A single figure of a
particular ratio is meaningless unless it is related to some standard or norm. One
of the popular techniques is to compare the ratios of a firm with the industry
average. It should be reasonably expected that the performance of a firm should be
in broad conformity with that of the industry to which it belongs. An inter firm
comparison would demonstrate the firms position vice-versa its competitors. If the
results are at variance either with the industry average or with those of the
competitors, the firm can seek to identify the probable reasons & in light, take
remedial measures.
40
BALANCE SHEET Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08
Sources of funds
Owner's fund
Equity share capital 17.04 17.04 17.04 17.04 17.04
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 132.21 124.59 114.50 105.30 97.78
Loan funds
Secured loans 90.02 95.56 75.04 82.65 103.32
Unsecured loans 1.61 4.45 10.00 16.44 15.06
Total 240.88 241.63 216.59 221.44 233.19
Uses of funds
Fixed assets
Gross block 153.31 145.95 136.53 131.73 126.06
Less : revaluation reserve - - - - -
Less : accumulated depreciation 66.41 59.47 53.25 47.08 40.61
Net block 86.90 86.48 83.28 84.64 85.46
41
BALANCE SHEET Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08
Capital work-in-progress 0.05 1.05 - 0.13 1.55
Investments 16.22 17.94 17.50 20.34 20.34
Net current assets
Current assets, loans & advances 230.08 197.74 171.99 171.02 180.59
Less : current liabilities & provisions 92.38 61.58 56.19 54.70 54.75
Total net current assets 137.70 136.16 115.80 116.32 125.84
Miscellaneous expenses not written - - - - -
Total 240.88 241.63 216.59 221.44 233.19
Notes:
Book value of unquoted investments 16.22 17.94 17.50 20.34 20.34
Market value of quoted investments - - - - -
Contingent liabilities 11.43 27.35 18.70 9.58 9.71
Number of equity sharesoutstanding (Lacs) 170.40 170.40 170.40 170.40 170.40
42
PROFIT LOSS ACCOUNT Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar 08
Income
Operating income 332.54 297.32 260.71 241.69 248.79
Expenses
Material consumed 184.07 165.76 146.18 135.80 133.19
Manufacturing expenses 25.23 32.84 28.28 25.92 27.00
Personnel expenses 36.79 35.68 27.03 20.92 22.61
Selling expenses - 16.47 15.76 16.79 18.25
Adminstrative expenses 57.11 22.22 18.15 16.29 16.21
Expenses capitalised - - - - -
Cost of sales 303.20 272.97 235.40 215.72 217.26
Operating profit 29.34 24.35 25.31 25.97 31.54
Other recurring income 0.25 0.64 0.49 1.04 0.59
Adjusted PBDIT 29.58 24.99 25.80 27.01 32.13
Financial expenses 11.73 8.22 9.00 12.59 13.41
Depreciation 7.39 6.81 6.79 6.59 6.38
Other write offs - - - - -
Adjusted PBT 10.47 9.96 10.01 7.83 12.34
Tax charges -0.35 -0.21 -0.35 -0.26 0.12
43
PROFIT LOSS ACCOUNT Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar 08
Adjusted PAT 10.82 10.17 10.36 8.09 12.23
Non recurring items -3.24 0.12 -0.68 -0.54 3.82
Other non cash adjustments 0.05 -0.21 -0.47 -0.02 -0.09
Reported net profit 7.63 10.08 9.20 7.52 15.96
Earnigs before appropriation 49.30 47.67 43.59 40.39 38.87
Equity dividend - - - - -
Preference dividend - - - - -
Dividend tax - - - - -
Retained earnings 49.30 47.67 43.59 40.39 38.87
CASH FLOW Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08
Profit before tax 18.40 17.69 17.85 19.50 29.05
Net cash flow-operating activity 10.78 10.36 15.41 27.13 22.81
Net cash used in investing activity -6.94 -11.40 -2.62 -4.01 -9.17
Netcash used in fin. activity -11.95 -0.35 -13.54 -21.76 -13.30
Net inc/dec in cash and equivlnt -7.98 -1.34 -1.01 1.36 0.34
Cash and equivalnt begin of year 17.54 4.13 5.15 3.79 4.15
44
CASH FLOW Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08
Cash and equivalnt end of year 9.56 2.79 4.13 5.15 4.49
RATIOS Mar ' 12 Mar ' 11 Mar 10 Mar 09 Mar 08
Per share ratios
Adjusted EPS (Rs) 6.35 5.97 6.08 4.75 7.18
Adjusted cash EPS (Rs) 10.68 9.96 10.06 8.62 10.92
Reported EPS (Rs) 4.48 6.04 5.40 4.41 9.42
Reported cash EPS (Rs) 8.81 10.03 9.39 8.28 13.16
Dividend per share - - - - -
Operating profit per share (Rs) 17.22 14.29 14.85 15.24 18.51
Book value (excl rev res) per share (Rs) 87.59 83.11 77.20 71.80 67.38
Book value (incl rev res) per share (Rs.) 87.59 83.11 77.20 71.80 67.38
Net operating income per share (Rs) 195.15 174.48 153.00 141.84 146.00
Free reserves per share (Rs) - 73.09 67.17 61.77 57.36
45
RATIOS Mar ' 12 Mar ' 11 Mar 10 Mar 09 Mar 08
Profitability ratios
Operating margin (%) 8.82 8.19 9.70 10.74 12.67
Gross profit margin (%) 6.60 5.90 7.10 8.01 10.11
Net profit margin (%) 2.29 3.45 3.52 3.09 6.43
Adjusted cash margin (%) 5.47 5.69 6.56 6.04 7.46
Adjusted return on net worth (%) 7.24 7.18 7.87 6.60 10.64
Reported return on net worth (%) 5.10 7.26 6.99 6.14 13.97
Return on long term funds (%) 9.21 12.02 14.20 15.75 19.74
Leverage ratios
Long term debt / Equity 0.61 0.06 0.01 0.05 0.13
Total debt/equity 0.61 0.70 0.64 0.81 1.03
Owners fund as % of total source 61.96 58.61 60.73 55.24 49.23
Fixed assets turnover ratio 1.38 2.04 1.91 1.83 1.97
Liquidity ratios
Current ratio 2.49 3.21 3.06 3.13 3.30
46
RATIOS Mar ' 12 Mar ' 11 Mar 10 Mar 09 Mar 08
Current ratio (inc. st loans) 2.49 0.83 0.81 0.77 0.73
Quick ratio 1.59 1.89 1.82 1.90 1.91
Inventory turnover ratio 4.19 3.93 3.98 3.84 3.52
Payout ratios
Dividend payout ratio (net profit) - - - - -
Dividend payout ratio (cash profit) - - - - -
Earning retention ratio 100.00 100.00 100.00 100.00 100.00
Cash earnings retention ratio 100.00 100.00 100.00 100.00 100.00
Coverage ratios
Adjusted cash flow time total debt 5.03 5.89 4.96 6.75 6.36
Financial charges coverage ratio 2.52 3.04 2.87 2.15 2.40
Fin. charges cov.ratio (post tax) 2.28 3.08 2.78 2.12 2.67
Component ratios
Material cost component (% earnings) 54.57 56.92 56.68 51.30 56.34
Selling cost Component - 5.54 6.04 6.94 7.33
47
RATIOS Mar ' 12 Mar ' 11 Mar 10 Mar 09 Mar 08
Exports as percent of total sales 14.24 14.45 14.11 15.63 17.99
Import comp. in raw mat. consumed 8.30 7.84 5.50 5.08 6.84
Long term assets / total Assets 0.30 0.34 0.36 0.38 0.37
Bonus component in equity capital (%) 50.00 50.00 50.00 50.00 50.00
48
CHAPTER-4
DATA ANALYSIS
49
ANALYSIS AND INTERPRETATION
1. LIQUIDITY RATIOS
1.1 CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILTIES
YEAR 2009-2010 2010-2011 2011-2012
Current Assets 1,34,94,75,847 1,81,20,38,152 1,80,59,34,193
Current
Liabilities
75,67,58,438 1,37,98,19,154 1,32,78,92,788
Current Ratio 1.78 1.31 1.36
INTERPRETATION
1. IDEAL CURRENT RATIO IS 2:1.
2. The current ratio has increased from 1.47 to 1.78 between the year 2004-
2005 and2009-2010. Then it decreased to 1.31 in the year 2010-2011 and
then increased 1.36 in the year 2011-2012.
3. This shows that the short term liquidity of the company is not good.
50
1.2 QUICK RATIO = QUICK ASSETS/CURRENT LIABILITIES
YEAR 2009-2010 2010-2011 2011-2012
Quick Assets 81,29,79,812 1,05,02,99,837 1,04,40,61,085
Current
Liabilities
75,67,58,438 1,37,98,19,154 1,32,78,92,788
Quick Ratio 1.07 0.76 0.79
INTERPRETATION
1. THE IDEAL QUICK RATIO IS 1:1
2. The quick ratio of the company has increased from 0.94 to1.07 between
the year 2004-2005 and2009-2010. Then decreased to 0.76 and0.79 in the
year 2010-2011 and 2011-2012.
3. This means that the company cannot meet its short term obligations.
51
1.3 CASH RATIO = CASH AND BANK/CURRENT LIABILITIES
YEAR 2009-2010 2010-2011 2011-2012
Cash 2,94,45,561 4,62,40,483 4,49,26,777
Current
Liabilities
75,67,58,438 1,37,98,19,154 1,32,78,92,788
Cash Ratio 0.039 0.033 0.034
INTERPRETATION
1. The cash ratio has first increased from 0.032 to 0.039 between the year
2004-2005 and2009-2010 and then decreased in the year 2010-2011 and
then increased by 0.001 in 2011-2012.
2. This reveals that the cash position of the company is not sound.
52
2. ACTIVITY RATIOS
2.1 INVENTORY TURNOVER RATIO = NET SALES / INVENTORY
YEAR 2009-2010 2010-2011 2011-2012
Net Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907
Inventory 53,64,96,035 76,17,38,315 76,18,73,108
Inventory
Turnover Ratio
4.12 3.12 3.38
INTERPRETATION
1. This shows that the company is somehow efficient in generating the
inventory into sales.
2. The inventory turnover ratio has decreased from 4.75 to 3.12 between the
years 2004-2005 and 2010-2011and increased to 3.38 in 2011-2012.
53
2.1 DEBTORS TURNOVER RATIO = SALES/DEBTORS
YEAR 2009-2010 2010-2011 2011-2012
Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907
Debtors 48,33,85,817 72,08,94,474 72,41,47,983
Debtors
Turnover Ratio
4.57 3.29 3.56
INTERPRETATION
1. The debtor turnover ratio has first increased from 4.12 to 4.57 between the
year 2004-2005 and2009-2010 and then decreased in the year 2010-2011
and then increased in 2011-2012.
2. This shows that the debtor management system is try to maintain their
position.
AVERAGE COLLECTION PERIOD = NUMBER OF WORKING DAYS /
54
DEBTORS TURNOVER RATIO
YEAR 2009-2010 2010-2011 2011-2012
Number of
Working Days
365 365 365
Debtors Turnover
Ratio
4.57 3.29 3.56
Average Collection
Period
80 days 110 days 102 days
INTERPRETATION
1. The average collection period has decreased from 89 days to 80 days
between the year 2004-2005 and2009-2010 and then increased in the year
2010-2011 and again decreased in 2011-2012.
2. More the average collection period less efficient is the debtor management
system.
2.2 WORKING CAPITAL TURNOVER RATIO = SALES /
55
NET WORKING CAPITAL
YEAR 2009-2010 2010-2011 2011-2012
Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907
Net Working
Capital
59,27,17,409 43,22,18,998 47,66,97,765
Working Capital
Turnover Ratio
3.73 5.50 5.41
INTERPRETATION
1. The working capital turnover ratio has first decreased from 5.32 to 3.73
between the year 2004-2005 and2009-2010 and then increased to 5.50 in
the year 2010-2011 and then decreased by 0.09 in the year 2011-2012.
3. PROFITABILITY RATIOS
56
3.1 OPERATING PROFIT RATIO = OPERATING PROFIT X 100
SALES
YEAR 2009-2010 2010-2011 2011-2012
Operating Profit 31,48,62,163 31,28,91,662 32,99,64,549
Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907
Operating Profit
Ratio
14.24 13.17 12.79
INTERPRETATION
1. The operating profit first increases to 14.24% in the year2009-2010 and
then decreases to 13.17% and 12.79% in the year 2010-2011 and 2011-
2012.
2. This shows that the operating cost of the company has increased from
2004-2005 to 2011-2012.
57
3.2 NET PROFIT RATIO = NET PROFIT AFTER TAX X 100
NET SALES
YEAR 2009-2010 2010-2011 2011-2012
Net Profit After
Tax
18,49,28,514 17,01,94,555 16,05,13,611
Net Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907
Net Profit Ratio 8.36 7.16 6.22
INTERPRETATION
1. The net profit ratio first increases from 5.03 to 8.36 in the year 2004-2005
and2009-2010 and then decreases to 7.16 in the year 2010-2011 and too
decreasing in 2011-2012.
2. This reveals that the efficiency in manufacturing, administering and selling
the products is decreasing.
4. LONG TERM SOLVENCY RATIOS
58
4.1 DEBT EQUITY RATIO = OUTSIDER’S FUNDS/SHAREHOLDER’S
FUNDS
YEAR 2009-2010 2010-2011 2011-2012
Outsider’s funds 25,80,06,52
4
38,70,96,269 1,14,81,89,285
Shareholder’s
funds
81,67,40,225 98,85,72,605 3,95,92,73,396
Debt Equity Ratio 0.32 0.39 0.29
INTERPRETATION
1. The debt equity ratio is decreasing which means that the company’s
dependence on the external debt is decreasing.
2. This shows greater flexibility in the company’s operation.
59
4.2 INTEREST NET PROFIT BEFORE INTEREST AND
TAXES
COVERAGE = FIXED INTEREST CHARGES
RATIO
YEAR 2005-2006 2010-2011 2011-2012
Net profit
before interest
and taxes
27,48,63,625 26,65,57,054 24,44,21,752
Interest 4,74,18,093 8,81,68,867 13,34,56,945
Interest
Coverage Ratio
5.8 3.02 1.83
INTERPRETATION
1. The interest coverage ratio first increases between the year 2004-2005
and2009-2010 and then decreases in the year 2010-2011 and in 2011-
2012.
2. A low ratio indicates excessive use of debt.
60
FINDINGS AND RECOMMENDATIONS
1. In India as most of the population is under low-income group, they wear
unbranded or local brand shoes. So the company which can capture this
income group especially living in villages and small towns will be the
winner.
2. As the exclusive showroom play an important role in making and marking
the image of company. So there should be policy for exclusive showroom.
3. Quality control operations should be modernized effectively as people are
more educated and give more preference to quality.
4. Television has become the most effective mode of advertising. New trend
of naming programs before the actual name of programs give more
insertion in the minds of people as there was performance on Zee T.V
called LIBERTY PUBLIC DEMAND.
5. There should be some special brands, which should be available only in
exclusive showrooms to attract the crowd there.
6. There should be no bargain with the quality of the product.
7. Showroom owners tend to heavily tend to heavily depend on the brand
image rather than they’re own skills and knowledge regarding product. So
the big companies should try to internationalize their products and image
and should give a psychological feeling of being a universal brand.
8. Regular meeting should be organized by the companies to educate the
showroom owners regarding new innovation, their features as well as new
policies.
9. Claim policy regarding replacement etc. should be clearly made by the
company and followed in spirit of the world.
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CONCLUSIONS
1. Most of customers felt Liberty as a premium product company (which is
true to much extent), which is out of reach of common man. It is
suggested that an economical range of footwear should also be introduced
to capture the low-income group people who account for most of the
population in villages & small towns.
2. Companies should control, review and improve their discount policy so as
to improve company’s image.
3. New designs and colours should be introduced in Ladies section, as ladies
every time demand something new.
4. More attention should be paid to customer’s complaints and efforts should
be made to remove them.
5. The placement of defected pairs should be paid more attention so as to
remove dissatisfaction among the exclusive showroom owners.
6. A Company persons should regularly visit exclusive showrooms and listen
to the problems and find solution to them as is done by Bata Company.
7. Some special planning on appointment of dealers should be there to avoid
the complications.
8. Trough inspection of stock should be done to avoid mixing of inferior
quality stock with fresh stock, which is send to dealers.
9. The company should allow at the most two exclusive showrooms in one
city. That too should be atleast 2—3 K.M apart to attract customers from
all the localities.
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BIBLIOGRAPHY
BOOKS
Pandey, I.M., “Financial Management”, Ed. 2007, VIkas Publishing House
Private Ltd., New Delhi.
Gupta, Shashi K., “Management Accounting”, Ed.2007, Kalyani
Publishers, New Delhi.
KOthari, C.R., “Research Methodology”, Ed.2007, New Age International
(P) Limited, Publishers, New Delhi.
MANUAL
Annual Reports
WEBSITES
www.liberyshoes.com
www.libertyfreedom.com
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QUESTIONNAIRE
Question 1) What is the liking of people towards LIBERTY SHOES?
Answer a) Y-yes
b) n- no
c) c- can’t say
Question 2) Response of people about LIBERTY SHOES?
Answer a) y-yes
b) n-no
c) c-can’t say
Question 3) Response of people that LIBERTY SHOES will give a healthy
competition to small leagues?
Answer a) y- yes
b) n- no
c) c- can’t say
Question 4) Response of people that LIBERTY SHOES will bring a
revolution in the industry?
Answer a) y-yes
b) n-no
c) c- can’t say
Question 5) Factors why people like LIBERTY SHOES?
Answer a) 1-affordability
b) 2-shape
c) 3-design
d) 4-other design
Question 6) Proportion of people who will shift to LIBERTY SHOES?
Answer a) Y-yes
b) n-no
c) c-can’t say
Question 7) Why would people prefer LIBERTY SHOES?
Answer a) 1-comfort
b) 2-safety
c) 3-reputation
d) 4-other reasons
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Question 8) Response about LIBERTY SHOES?
Answer a) 1-very good
b) 2-good
Question 9) LIBERTY SHOES is made for villages or cities? Discuss
Answer a) 1-town/cities
b) 2-villages
c) 3-both
d) 4-can’t say
Question 10) What do you think about the service supply of beverages at
outlets?
(a) Very good (b) good (c) normal (d) bad (e) very bad
Question 11) How many times you face the shortage of popular brand of
Liberty Shoes at outlets in a week?
(a) 1time (b) 2times (c) 3 times (d) more than 3 times
Question 12) Which type of scheme provided by Liberty Shoes attract you?
(a) Daily Scheme on brands
(b) Monopoly discount
(c) Monthly card scheme
(d) Display schemes
Question 13) How is the behavior of Liberty Shoes official?
(a) Very good (b) good (c) normal (d) bad (e) very bad
Question 14) Did advertisement of Liberty Shoes affect sell?
(a) Yes (b) No
Question 15) What sort of others problems you are having?
Ans.
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THANK YOU
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