performance analysis in aditya birla group (1)
TRANSCRIPT
A
PROJECT REPORT
ON“FINANCIAL PERFORMANCE ANALYSIS”
OF
ADITYA BIRLA GROUP SYNOPSIS REPORT
Submitted in partial fulfillment of
The requirement for the award degree of
MASTER OF BUSINESS ADMINISTRATION
TO
DEPARTMENT OF COMMERCE AND BUSINEESS MANAGEMENTJNT UNIVERSITY, HYDERABAD.
SUBMITTED BY
K.B. KRANTHI KUMARHT. NO. 07E41E0022
SREE DATTHA INSTITUTE OF ENGINEERING AND SCIENCE(Affiliated to JNT University)IBRAHIMPATNAM, R.R.DIST.
(2007-2009)
A
PROJECT REPORTON
“FINANCIAL PERFORMANCE ANALYSIS”
OFADITYA BIRLA GROUP SYNOPSIS REPORT
SUBMITTED TO
DEPORTMENT OF BUSINESS MANAGEMENT
SREE DATTHA COLLEGE OF ENG& SCIENCE
In partial fulfillment of the award degree in Business Administration (MBA)
By
K.B. KRANTHI KUMARHT. NO. 07E41E0022
Under the super vision of Dr. Mrs. USHARANI
SREE DATTHA INSTITUTE OF ENGINEERING AND SCIENCEIBRAHIMPATNAM, R.R.DIST.
DEPARTMENT OF COMMERCE AND BUSINEES MANAGEMENTJNT UNIVERSITY, HYDERABAD.
(2007-2009)
ACKNOWLDGEMENT
Behind every successful achievement lies great contribution by those
without whom that could have been achieved to them, although more words of
gratitude is insufficient for their unlimited contribution.
I take this opportunity to revel my heartfelt gratitude imprinted deep within me.
I am very much thankful to the finance manager K.B.KRANTHI KUMAR and
the staff of ADITYA BIRLA GROUP SYNOPSIS REPORT for giving encouragement and their kind cooperation.
I would like to thanks to my college principal Mr RAM REDDY lecturers
especially Mrs C USHA RANI (HOD) and every one and apologies to those I
have missed upon, who helped me in successful completion of this project.
By
(K.B.KRANTHI KUMAR )
DECLARATION
I hereby declare that the enclosed project entitled “FINANCIAL
PERFERMANCE & ANALYSIS” done in ADITYA BIRLA GROUP
SYNOPSIS REPORT is submitted to “JNT UNIVERSITY, HYDERABAD” in
partial fulfillment of “MASTER OF BUSINESS ADMINISTRATION”, the
project is an original work done by me and to the best of my knowledge this work
is not submitted to any other university or college for award of any other degree,
diploma or Fellowship.
K.B.KRANTHI KUMAR (07E41E0022)
C O N T E N T S
TOPIC PAGE NO
1.CHAPTER -1 EXCUTIVE SYNOPSIS 1-4
2. CHAPTER –II INTRODUCTION 5-7
3. CHAPTER –III INDUSTRY PROFILE 8-13
4. CHAPTER –IV COMPANY POROFILE 14-27
5. CHAPTER –V
RESEARCH AND METHODOLOGY 28 -30
6. CHAPTER- VI
CONCEPTUAL FRAMEWORK 31-44
7. CHAPTER- VII
DATA ANALYSIS & INTERPRETATION 45-91
8. CHAPTER- VIII
FINDINGS&SUGETIONS 92-96BIBILOGRAPHY 97
CHAPTER -I
EXECUTIVE SYNOPSIS
EXECUTIVE SYNOPSIS
COMPANY PROFILE:-
The Aditya Birla GroupLtd. Established in 1984 as a manufacturing organization.
The Aditya Birla Group limited is now on its stride of completing its 25th year in
the history of manufacturing & infrastructure markets serving the cause of industrial
development & economy. The group has made its beginning in 1984 and today occupies
a prominent place among the leading manufacturing industry in India.
The Aditya Birla Group has been promoting the mobilization of funds in the
industrial for the development of industrialization in the state of Andhra Pradesh.
NEED FOR THE STUDY:
The main motto behind starting of any business is to gain profits. We can say the
company is running in healthy position by observing its past and present financial
position. Aditya Birla Group. The Company started in the year 1984, now the company
management wants to assess the financial position of the company. Hence the present
study has been under taken with the help of Ratio Analysis.
SCOPE OF THE STUDY :
The scope of the study is confined to the following aspects. To carry out the
present study, a period of three years is taken from 2006 to 2009 in the context, some
selected ratios like liquidity ratios, activity ratios, leverage ratios and profitability ratios
are examined to test the financial position of the company.
OBJECTIVES OF THE STUDY:
Keeping in view of above-mentioned facts, the following are the objectives of the
study.
Primary objective:
To analyze the financial performance of the company through the calculation of various
ratios.
Secondary objectives
To study the financial strengths and weakness of the company.
To examine the short-term solvency of the company.
Research methodology:
Research Design : Analytical
Analytical tools : Ratio Analysis
Data Sources : The data is collected from secondary data sources.
Like company annual reports, Brochures etc.
Period of the study:
The present study has been undertaken for a period of three years i.e., from 2006-
07 to 2008-09.
CHAPTER -II
INTRODUCTION
INTRODUCTION
A financial statement that measures a company's financial performance over a
specific accounting period. Financial performance is assessed by giving a summary of
how the business incurs its revenues and expenses through both operating and non-
operating activities. It also shows the net profit or loss incurred over a specific accounting
period, typically over a fiscal quarter or year.
Also known as the "profit and loss statement" or "statement of revenue and expense".
The income statement is the one of the three major financial statements. The other two
are the balance sheet and the statement of cash flows. The income statement is divided
into two parts: the operating and non-operating sections.
The portion of the income statement that deals with operating items is interesting to
investors and analysts alike because this section discloses information about revenues and
expenses that are a direct result of the regular business operations. For example, if a
business creates sports equipment, then the operating items section would talk about the
revenues and expenses involved with the production of sports equipment.
The non-operating items section discloses revenue and expense information about
activities that are not tied directly to a company's regular operations. For example, if the
sport equipment company sold a factory and some old plant equipment, then this
information would be in the non-operating items section.
A financial statement that summarizes a company's assets, liabilities and shareholders'
equity at a specific point in time. These three balance sheet segments give investors an
idea as to what the company owns and owes, as well as the amount invested by the
shareholders.
Assets = Liabilities + Shareholders' Equity
Each of the three segments of the balance sheet will have many accounts within it that
document the value of each. Accounts such as cash, inventory and property are on the
asset side of the balance sheet, while on the liability side there are accounts such as
accounts payable or long-term debt. The exact accounts on a balance sheet will differ by
company and by industry, as there is no one set template that accurately accommodates
for the differences between different types of businesses.
It's called a balance sheet because the two sides balance out. This makes sense: a
company has to pay for all the things it has (assets) by either borrowing money
(liabilities) or getting it from shareholders (shareholders' equity).
The balance sheet is one of the most important pieces of financial information issued by a
company. It is a snapshot of what a company owns and owes at that point in time. The
income statement, on the other hand, shows how much revenue and profit a company has
generated over a certain period. Neither statement is better than the other - rather, the
financial statements are built to be used together to present a complete picture of a
company's finances.
CHAPTER– III
INDUSTRY pROFILE
Manufacturing industry refers to those industries which involve in the manufacturing and
processing of items and indulge in either creation of new commodities or in value
addition. The manufacturing industry accounts for a significant share of the industrial
sector in developed countries. The final products can either serves as a finished good for
sale to customers or as intermediate goods used in the production process.
Evolution of the manufacturing industry:
Manufacturing industries came into being with the occurrence of technological and socio-
economic transformations in the Western countries in the 18th-19th century. This was
widely known as industrial revolution. It began in Britain and replaced the labor intensive
textile production with mechanization and use of fuels.
Working of manufacturing industry:
Manufacturing industries are the chief wealth producing sectors of an economy. These
industries use various technologies and methods widely known as manufacturing process
management. Manufacturing industries are broadly categorized into engineering
industries, construction industries, electronics industries, chemical industries, energy
industries, textile industries, food and beverage industries, metalworking industries,
plastic industries, transport and telecommunication industries.
Manufacturing industries are important for an economy as they employ a huge share of
the labor force and produce materials required by sectors of strategic importance such as
national infrastructure and defense. However, not all manufacturing industries are
beneficial to the nation as some of them generate negative externalities with huge social
costs. The cost of letting such industries flourish may even exceed the benefits generated
by them.
Manufacturing industry analysis suggests that the manufacturing industry has served as
the pivotal factor in the economic development of a country. The same applies for the
United States Of America, whose economy has been growing rapidly owing to the
successful manufacturing industry. Manufacturing industry analysis also indicates that
the manufacturing industry provides employment to many thereby contributing to the
gross domestic product and per capita income of the country. Approximately 75% of the
engineers as well as the scientists get employed in the manufacturing industry as recorded
by a manufacturing industry analysis. The Census bureau categorizes a particular
manufactured product depending on the primary goods produced by the manufacturing
industry.
Statistical data showing the impact of the manufacturing industry on economy:
In the year 1992, the expenditure incurred on the research and development by the
manufacturing establishments was USD$91.2 billion in the United States Of America.
Out of this Non Governmental manufacturing establishments registered 79.4% of
USD$91.2 billion.
18% of GDP or gross domestic product in the year 1993 was due to revenues generated
by the manufacturing industry, established according to reports of manufacturing industry
analysis.
46.4 was the result obtained in order to find out the number of workers employed in
every establishment. This figure was registered in the year 1992.
15% of shipments in the manufacturing segment were due to the material industry.
Capital stock has registered a steady rise for all the sectors of the manufacturing industry
since 1982.
Employment opportunities in the manufacturing industry have declined comparatively.
Manufacturing industry analysis also suggests that in some countries like China,
technological know how has to be developed. Despite the fact that China is ranked fourth
in the manufacturing productivity, due to technological lacunae, it is not being able to
compete in the world market. Also needed are professionals well versed in the
technological know how.
Owing to the emerging technologies world wide, the world manufacturing industry has
geared up and has incorporated several new technologies within it's purview. Economists
consider the World manufacturing industry as a sector which generates a lot of wealth.
Generating employment, introducing latest techniques, real earnings from shipments etc.,
have put the world manufacturing industry in a favorable position.
With the implementation of the concept of eco friendly environment, world
manufacturing industry has taken several measures to ensure that the manufacturing
industries worldwide abide by the eco friendly norms. World manufacturing industry also
plays an important role in the defense of a country. By manufacturing aircrafts which
play a vital role in the country's defense, the aerospace manufacturing industry acts as a
shield. Other industries in the manufacturing sector manufactures products which are
indispensable in our daily lives. With regard to the GDP or gross domestic product, world
manufacturing industry contributes to the global economy as well as the global GDP.
World manufacturing industry and type of economy:
Capitalist economy:
Manufacturing industry in a capitalist economy indulge in mass production and make
them available to the customers by earning profits.
Collectivist economy:
Manufacturing industry in a collectivist economy is guided by a state run agency for
making available the manufactured goods depending on the requirement.
Modern economy:
Manufacturing industry in a modern economy operates under regulations framed by the
Government.
The manufacturing industry in India has all the qualities which enhance economic
development, increase the productivity of the manufacturing industry and face
competition from the global markets. The Manufacturing industry in India is believed to
have the potential of improving the economic condition of India.
Indian manufacturing industry: Research findings
Studies conducted on the manufacturing industry have concluded that India has a
working population of 75%. Out of this, only 600 million have acquired education till
middle school. Due to this reason, the manufacturing industry in India, which is labor
intensive, can provide the requisite number of employment units in the country. Studies
have indicated that the productivity of the manufacturing industry in India is
approximately 1/5th of the productivity in the manufacturing industry of United States Of
America. It is about ½ as compared to the productivity levels in South Korea as well as
Taiwan. Labor productivity has escalated only to a small extent in case of India in
comparison to United States of America, on the contrary, labor productivity has increased
manifold in countries like Taiwan and Korea.
Manufacturing industry in India and exports:
Exports of manufactured goods in India accounted for 75% in comparison to exports of
manufactured goods all over the world. Owing to the performance manifested by the
export sector in India, the scenario indicates that there is less competition in the
manufacturing segment. Absence of competition is also established by the fact that in
spite of reducing the tariff in the early and mid 90s, India continued to be one of the
protected economies of the world. Contribution of India's export towards international
market grew from 05% to 0.7% during 1990 to 2000. During the same period, Malaysia,
China, Thailand and South Korea, registered almost double increase in exports.
CHAPTER– IV
COMPANY PROFILE
A US $29.2 billion corporation, the Aditya Birla Group is in the league of Fortune 500. It
is anchored by an extraordinary force of 130,000 employees, belonging to 30 different
nationalities. In India, the Group has been adjudged "The Best Employer in India and
among the top 20 in Asia" by the Hewitt-Economic Times and Wall Street Journal Study
2007. Over 50 per cent of its revenues flow from its overseas operations.
The Group operates in 25 countries — India, UK, Germany, Hungary, Brazil, Italy,
France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand,
Laos, Indonesia, Philippines, Dubai, Singapore, Myanmar, Bangladesh, Vietnam,
Malaysia and Korea.
Globally the Aditya Birla Group is:
A metals powerhouse, among the world's most cost-efficient aluminium and copper
producers. Hindalco-Novelis is the largest aluminium rolling company. It is one of the
three biggest producers of primary aluminium in Asia, with the largest single location
copper smelter
No.1 in viscose staple fiber
In India:
A premier branded garments player
The second largest player in viscose filament yarn
The second largest in the chlor-alkali sector
Among the top five mobile telephony companies
A leading player in life insurance and asset management
Among the top three supermarket chains in the retail business
Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does
not come in the way of the need to keep learning afresh, to keep experimenting.
Beyond business — the Aditya Birla Group is:
Working in 3,700 villages
Reaching out to seven million people annually through the Aditya Birla Centre for
Community Initiatives and Rural Development, spearheaded by Mrs. Rajashree Birla
Focusing on: Health care, education, sustainable livelihood, infrastructure and
espousing social causes
Running 41 schools and 18 hospitals
Transcending the conventional barriers of business to send out a message that "We care".
Vision:
To be a premium global conglomerate with a clear focus on each business.
Mission
To deliver superior value to our customers, Shareholders, employees and Society at
large.
Values
Integrity, Commitment, Passion, Seamlessness, Speed.
LOGO
The name “Aditya Birla” evokes all that is positive in business and in life. It exemplifies
integrity, quality, performance, perfection and above all character.
Logo is the symbolic reflection of these traits. It is the cornerstone of our corporate
identity. It helps us leverage the unique Aditya Birla brand and endows us with a
distinctive visual image.
Depicted in vibrant, earthy colours, it is very arresting and shows the sun rising over two
circles. An inner circle symbolizing the internal universe of the Aditya Birla Group, an
outer circle symbolizing the external universe, and a dynamic meeting of rays converging
and diverging between the two.
Through its wide usage, we create a consistent, impact-oriented Group image. This
undoubtedly enhances our profile among our internal and external stakeholders.
Corporate logo thus serves as an umbrella for our Group. It signals the common values
and beliefs that guide our behaviour in all our entrepreneurial activities. It embeds a sense
of pride, unity and belonging in all of our 130,000 colleagues spanning 25 countries and
30 nationalities across the globe. Our logo is our best calling card that opens the gateway
to the world.
Dr. Pragnya Ram as the Chief Custodian of the Aditya Birla logo
OVERVIEW
The Aditya Birla Group, India's first multinational corporation, traces its origins back
to the tiny village of Pilani in the Rajasthan desert, where Seth Shiv Narayan Birla
started cotton trading operations in 1857. Today, the Group's footprint extends to 25
countries and its revenues are US$ 29.2 billion. We retrace the highlights of this
remarkable journey, starting from the present:
2009
In recognition of work that truly exemplifies the highest values of society and
corporate leadership for social responsibility and sustainable development initiatives,
the Reader's Digest Pegasus Star Award has been conferred on Hindalco. Mrs.
Rajashree Birla who spearheads all the Group's social projects received this much
coveted award on behalf of Hindalco from Mr. Arun Jaitley, MP, Rajya Sabha, on 21
January 2009 in Delhi.
2008
The President of India, Mrs. Pratibha Patil conferred the much coveted Rotary
International Polio Eradication Champion Award on Mrs. Rajashree Birla in an
elegant function at the Rashtrapati Bhavan (Delhi), attended by the Chairman, select
Rotarians and WHO officials.
2007
The Aditya Birla Group was honoured with the India Today Group's Readers Digest
Gold award in recognition of the work that truly exemplifies the highest values of
society as well as those of Reader's Digest. The award was received by Mrs.
Rajashree Birla, Chairperson, Aditya Birla Center for Community Initiatives and
Rural Development, at the Pegasus Corporate Social Responsibility Awards 2007
function.
Hindalco awarded the CII - Sorabji Green Business Centre "National Award for
Excellence in Water Management 2007".
In May 2007, Novelis became a Hindalco subsidiary with the completion of the
acquisition process. The transaction makes Hindalco the world's largest aluminum
rolling company and one of the biggest producers of primary aluminum in Asia, as
well as being India's leading copper producer.
2006
Hindalco in a joint venture with Almex USA Inc.
TransWorks Information Services announces success of bid to acquire Minacs
Worldwide.
Grasim Industries Limited, India; Thai Rayon Public Company Limited, Thailand and
P.T. Indo Bharat Rayon, Indonesia form a JV with Hubei Jing Wei Chemical Fibre
Company, China, for VSF.
Hindalco awarded the Greentech Safety Silver Award for its outstanding safety
performance during 2005-06.
2005
Indian Rayon re-christened as Aditya Birla Nuvo.
Aditya Birla Group to set up a world-class aluminium project in Orissa.
The Aditya Birla Group signs a framework agreement to acquire St Anne Nackawic
Pulp Mill, Canada.
2004
Board reconstituted with Mr. Kumar Mangalam Birla taking over as Chairman.
Completion of the implementation process to demerge the cement business of L&T
and completion of open offer by Grasim, with the latter acquiring controlling stake in
the newly formed company UltraTech.
Grasim, Nagda, received the FICCI Annual Award 2003-2004 in
recognition of corporate initiaitve in rural development.
Bihar Caustic and Chemicals Ltd., Rehla, Jharkhand, has received the
FICCI Annual Award 2003-2004 in recognition of corporate initiative in family
welfare.
Hindalco recieves India CFO Award 2004 for excellence in finance in a large
corporate.
Scheme of Arrangement announced to merge Indal with Hindalco.
Indian Rayon completes its brownfield expansion of 40,000 TPA at Hi-Tech Carbon,
Gummidipundi, taking total capacity to 1,60,000 TPA.
2003
Mr. Kumar Mangalam Birla, Chairman of the Group, is selected as Business India's
Businessman of the Year - 2003.
Mr. Kumar Mangalam Birla is selected as The Economic Times' Business Leader of
the year.
The Group is ranked 16th in India's first ever survey of 'Great places to work in',
published in Business World magazine. The Group's joint venture concern, Birla Sun
Life Insurance, is ranked 9th in the same study.
The Group is ranked 20th in a study on the 'Best Employers in India', conducted by
Hewitt Associates and Business Today.
Hindalco receives the Asian CSR Award for its "Rural Poverty Alleviation
Programme". The Asian CSR Awards are Asia's premier awards programme on
Corporate Social Responsibility.
The Group acquires the Mount Gordon Copper mines in Australia, another strategic
step in becoming a globally competitive copper player.
Liaoning Birla Carbon, the Group's first carbon black company in China, is
incorporated.
The board of engineering major Larsen & Toubro Ltd (L&T) decides to demerge its
cement business into a separate cement company (CemCo), in which L&T will retain
20 per cent of its equity with the balance to be distributed to their shareholders in
proportion to their shareholding in L&T. As a consequence, Grasim to acquire an 8.5
per cent equity stake from L&T and then make an open offer for 30 per cent of the
equity of CemCo, to acquire management control of CemCo.
The Group divests its entire 37.38 per cent equity stake in Mangalore Refineries and
Petrochemicals Ltd (MRPL) to the Oil and Natural Gas Corporation (ONGC).
MANAGEMENT TEAM
The Aditya Birla Management Corporation Private Limited, is the Group's apex
decision making body and provides strategic direction to Group companies. Its Board
of Directors comprises:
:: Mr. Kumar Mangalam Birla, Chairman
:: Mr. S. Aga
:: Mr. D. Bhattacharya
:: Mr. S. K. Jain
: Dr. S. Misra
: Mr. S. Misra
:: Dr. B. K. Singh
:: Mr. K. K. Maheshwari
:: Mr. Vikram Rao
:: Mr. Ajay Srinivasan
HERITAGE
The roots of the Aditya Birla Group date back to the 19th century in the picturesque
town of Pilani, set amidst the Rajasthan desert. It was here that Seth Shiv Narayan
Birla started trading in cotton, laying the foundation for the House of Birlas.
Through India's arduous times of the 1850s, the Birla business expanded rapidly. In
the early part of the 20th century, our Group's founding father, Ghanshyamdas Birla,
set up industries in critical sectors such as textiles and fibre, aluminium, cement and
chemicals. As a close confidante of Mahatma Gandhi, he played an active role in the
Indian freedom struggle.
He represented India at the first and second round-table conference in London, along
with Gandhiji. It was at "Birla House" in Delhi that the luminaries of the Indian
freedom struggle often met to plot the downfall of the British Raj Ghanshyamdas
Birla found no contradiction in pursuing business goals with the dedication of a saint,
emerging as one of the foremost industrialists of pre-independence India. The
principles by which he lived were soaked up by his grandson, Aditya Vikram Birla,
our Group's legendary leader.
Aditya Vikram Birla: putting India on the world map
A formidable force in Indian industry, Mr. Aditya Birla dared to dream of setting up a
global business empire at the age of 24. He was the first to put Indian business on the
world map, as far back as 1969, long before globalization became a buzzword in
India.
In the then vibrant and free market South East Asian countries, he ventured to set up
world-class production bases. He had foreseen the winds of change and staked the
future of his business on a competitive, free market driven economy order. He put
Indian business on the globe, 22 years before economic liberalisation was formally
introduced by the former Prime Minister, Mr. Narasimha Rao and the former Union
Finance Minister, Dr. Manmohan Singh. He set up 19 companies outside India, in
Thailand, Malaysia, Indonesia, the Philippines and Egypt.
Interestingly, for Mr. Aditya Birla, globalisation meant more than just geographic
reach. He believed that a business could be global even whilst being based in India.
Therefore, back in his home-territory, he drove single-mindedly to put together the
building blocks to make our Indian business a global force.
Under his stewardship, his companies rose to be the world's largest producer of
viscose staple fibre, the largest refiner of palm oil, the third largest producer of
insulators and the sixth largest producer of carbon black. In India, they attained the
status of the largest single producer of viscose filament yarn, apart from being a
producer of cement, grey cement and rayon grade pulp. The Group is also the largest
producer of aluminium in the private sector, the lowest first cost producers in the
world and the only producer of linen in the textile industry in India.
At the time of his untimely demise, the Group's revenues crossed Rs.8,000 crore
globally, with assets of over Rs.9,000 crore, comprising of 55 benchmark quality
plants, an employee strength of 75,000 and a shareholder community of 600,000.
Most importantly, his companies earned respect and admiration of the people, as one
of India's finest business houses, and the first Indian International Group globally.
Through this outstanding record of enterprise, he helped create enormous wealth for
the nation, and respect for Indian entrepreneurship in South East Asia. In his time, his
success was unmatched by any other industrialist in India.
That India attains respectable rank among the developed nations, was a dream he
forever cherished. He was proud of India and took equal pride in being an Indian.
Under the leadership of our Chairman, Mr. Kumar Mangalam Birla, the Group has
sustained and established a leadership position in its key businesses through
continuous value-creation. Spearheaded by Grasim, Hindalco, Aditya Birla Nuvo,
Indo Gulf Fertilisers and companies in Thailand, Malaysia, Indonesia, the Philippines
and Egypt, the Aditya Birla Group is a leader in a swathe of products — viscose
staple fibre, aluminium, cement, copper, carbon black, palm oil, insulators, garments.
And with successful forays into financial services, telecom, software and BPO, the
Group is today one of Asia's most diversified business groups.
GROUP COMPANIES
:: Grasim Industries Ltd.
:: Hindalco Industries Ltd.
:: Aditya Birla Nuvo Ltd.
:: UltraTech Cement Ltd.
INDIAN COMPANIES
:: PSI Data Systems
:: Aditya Birla Minacs Worldwide Limited
:: Essel Mining & Industries Ltd
:: Idea Cellular Ltd.
:: Aditya Birla Insulators
:: Aditya Birla Retail Limited
:: Bihar Caustic and Chemicals Ltd.
INTERNATIONAL COMPANIES
Thailand
:: Thai Rayon
:: Indo Thai Synthetics
:: Thai Acrylic Fibre
:: Thai Carbon Black
:: Aditya Birla Chemicals (Thailand) Ltd.
:: Thai Peroxide
Philippines
:: Indo Phil Group of companies
:: Pan Century Surfactants Inc.
Indonesia
:: PT Indo Bharat Rayon
:: PT Elegant Textile Industry
:: PT Sunrise Bumi Textiles
:: PT Indo Liberty Textiles
:: PT Indo Raya Kimia
Egypt
:: Alexandria Carbon Black Company S.A.E
:: Alexandria Fiber Company S.A.E
China
:: Liaoning Birla Carbon
:: Birla Jingwei Fibres Company Limited
:: Aditya Birla Grasun Chemicals (Fangchenggang) Ltd.
Canada
:: A.V. Group
Australia
:: Aditya Birla Minerals Ltd.
Laos
:: Birla Laos Pulp & Plantations Company Limited
North and South America, Europe and Asia
:: Novelis Inc.
Singapore
:: Swiss Singapore Overseas Enterprises Pte Ltd. (SSOE)
Joint ventures
:: Birla Sun Life Insurance Company
:: Birla Sun Life Asset Management Company
:: Birla Sun Life Distribution Company Limited
:: Tanfac Industries Limited
PRODUCTS
COMPANY: HINDALCO
:: Everlast aluminium roofing sheets
:: Freshwrapp aluminium foil
:: Freshpakk semi-rigid containers
:: Permashield waterproofing
:: Aluminium foil
:: Aura alloy wheels
:: Hindalco extrusions
COMPANY: HINDALCO
:: Birla Copper
:: Birla Gold
:: Birla Silver
COMPANY: GRASIM
:: Birla Super
:: UltraTech Cement (formerly Birla Plus)
:: Birla White
COMPANY: ULTRATECH
:: UltraTech cement
:: UltraTech Concrete
COMPANY: GRASIM
:: Birla Cellulose
COMPANY: INDO GULF
:: Birla Shaktiman Urea
COMPANY: HINDALCO
:: Birla Balwan
COMPANY: ADITYA BIRLA NUVO
:: Linen Club
:: Pyroguard
:: Ray One
:: Kolorone
COMPANY: GRASIM
:: Ice Touch
:: Uncrushables
:: Purista
:: Clean Fab
COMPANY: THAI ACRYLIC FIBRE
:: Texlan
CHAPTER– V
RESEARCH METHODOLOGY
NEED FOR THE STUDY:
The main motto behind starting of any business is to gain profits. We can say the
company is running in healthy position by observing its past and present financial position.
Aditya Birla Group. The Company started in the year 1984, now the company management
wants to assess the financial position of the company. Hence the present study has been under
taken with the help of Ratio Analysis.
Objectives of the study
To study to study the existing financial of the company.
To study the operating cycle analysis of the company.
To analyze future financial position of the company
To analyze the financial performance of the company with reference to the cash flows.
Analyzing profit & loss account for the next four years with the help of last five years data available.
Research Methodology
Research design - Analytical
Analytical tools - Ratio analysis, schedule of change in
Working capital, operating cycle analysis.
Data Sources - Secondary data has been collected from
Company records, annual reports
Period of study - 2005-06 to 2008-09
Source of data
1. The data required for the study is mainly based on secondary data.
2. Five year annual report of Aditya Birla Group from 2005-2009 comprising of balance
sheets, P&L accounts.
3. Interaction with the related finance departments.
4. Past five year’s profit & loss account.
5. The related data is obtained from the printed and published journals and financial
statement of the corporation.
Tools for data analysis: Some selected ratios like liquidity ratios, activity ratios, leverage ratios, Operating
cycle analysis and profitability ratios are examined to test the financial position of the company.
Period of study:
Data for a period of 5 years has been taken for the study i.e. starting from 2005-2009
Scope of the study
The scope of the study is confined to the following aspects. To carry out the
present study, a period of five years is taken from 2005 to 2009 in the context, some
selected ratios like liquidity ratios, activity ratios, leverage ratios and profitability ratios
are examined to test the financial position of the company.
Objectives of the study
Keeping in view of above-mentioned facts, the following are the objectives of the
study.
CHAPTER– VI
CONCEPTUAL FRAMEWORK
Financial statements:
(Or financial reports) are formal records of a business' financial activities. These
statements provide an overview of a business' profitability and financial condition in both
short and long term. There are four basic financial statements:
1. Balance Sheet – Is also referred to as statement of financial condition, reports on a
company's assets, liabilities and net equity as of a given point in time.
2. Income Statement - Is also referred to as Profit or loss statement, reports on a
company's results of operations over a period of time.
3. Cash Flow Statement – reports on a company's cash flow activities, particularly its
operating, investing and financing activities.
4. Statement of Retained Earnings –
It explains the changes in a company's retained earnings over the reporting
period.
Because these statements are often complex, an extensive set of Notes to the Financial
Statements and management discussion and analysis is usually included. The notes will
typically describe each item on the Balance sheet, Income statement and Cash flow
statement in further details. Notes to Financial Statements are considered an integral part
of the Financial Statements.
Income statements
is a financial statement for companies that indicate how net revenue (money received
from the sale of products and services before expenses are taken out, also known as the
"top line") is transformed into net income (the result after all revenues and expenses have
been accounted for, also known as the "bottom line"). The purpose of the income
statement is to show managers and investors whether the company made or lost money
during the period being reported. Also called Profit and Loss Statement (P&L) outside
the USA or Statement of Activities and Changes in Net Assets in reference to
charitable organizations.
Usefulness and limitations of income statement
Income statements should help investors and creditors determine the past performance of
the enterprise; predict future performance; and assess the risk of achieving future cash
flows.
However, information in an income statement has several limitations:
items that might be relevant but cannot be reliably measured are not reported (e.g.
brand recognition and loyalty)
some numbers depend on accounting methods used (e.g. using FIFO or LIFO
accounting to measure inventory level)
Some numbers depend on judgments and estimates (e.g. depreciation expense
depends on estimated useful life and salvage value).
Single-step income statement
In the single-step statement, just two groups exist: revenues and expenses. Expenses are
deducted from revenues to get net income (single step). Its main advantage is simplicity,
but more and more companies choose multiple-step statements. The basic format is
shown below.
Example:
Revenue
Net sales ____________________
Rent revenue _________________
Interest revenue _____________
Total revenue ______________
Expenses (usually sorted by amount)
Cost of goods sold ___________
Selling expenses _____________
Administrative expenses ______
Interest expense _____________
Total expenses _____________
Income before taxes ____________
Income taxes ___________________
Net income _____________________
Earnings per share _____________
Items on income statement
Operating section
Net Revenue –
Inflows or other enhancements of assets of an entity or settlements of its
liabilities during a period from delivering or producing goods, rendering services, or
other activities that constitute the entity's ongoing major or central operations.
Usually presented as sales minus sales discounts, returns, and allowances.
Expenses –
Outflows or other using-up of assets or incurrence of liabilities during a
period from delivering or producing goods, rendering services, or carrying out other
activities that constitute the entity's ongoing major or central operations.
o Cost of goods sold - represents the amount a product costs to produce
o General and administrative expenses (G & A) - represent expenses to
manage the business (officer salaries, legal and professional fees, utilities,
insurance, depreciation of office building and equipment, stationery,
supplies)
o Selling expenses - represent expenses needed to sell products (e.g., sales
salaries and commissions, advertising, freight, shipping, depreciation of
sales equipment)
o R & D expenses - represent expenses included in research and development
o Depreciation - represents costs associated with depreciated assets
Non-operating section
Other revenues or gains –
revenues and gains from other than primary business activities (e.g. rent,
patents). It also includes unusual gains and losses that are either unusual or infrequent,
but not both (e.g. sale of securities or fixed assets).
Other expenses or losses –
expenses or losses not related to primary business operations.
Irregular items
They are reported separately because this way users can better predict future
cash flows - irregular items most likely won't happen next year. These are reported net of
taxes.
Discontinued operations
is the most common type of irregular items. Shifting business location, stopping
production temporarily, or changes due to technological improvement do not qualify
as discontinued operations.
Extraordinary items
are both unusual (abnormal) and infrequent, for example, unexpected nature
disaster, expropriation, prohibitions under new regulations. Note: natural disaster
might not qualify depending on location (e.g. frost damage would not qualify in
Canada but would in the tropics).
Changes in accounting principle
is, for example, changing method of computing depreciation from straight-line to
sum-of-the-years'-digits. However, changes in estimates (e.g. estimated useful life of a
fixed asset) do not qualify.
Earnings per share
Because of its importance, earnings per share (EPS) are required to be disclosed on the
face of the income statement. A company which reports any of the irregular items must
also report EPS for these items either in the statement or in the notes.
There are two forms of EPS reported:
Basic :
in this case "weighted average of shares outstanding" includes only actual
stocks outstanding.
Diluted :
in this case "weighted average of shares outstanding" is calculated as if all stock
options, convertible bonds, and other securities that could be transformed into shares
are transformed. This way number of shares increases and EPS decreases. Diluted
EPS is considered to be a more accurate way to measure EPS.
Alternative setup of multiple-step income statement
Setups of income statements come in many shapes and forms. Below is an alternative
definition which carries a direct relationship to terminology commonly used in financial
analysis. On the right hand side of the table several alternative suggestions for
terminology are listed - economics and accounting is by no means a discipline with a
single standard definition of terms used. Hence, part of the skill in understanding income
statements and balance sheets is to see through the words
Income statement item Acronym spelled out Alternative terminology
Revenues Sales, Income, Turnover
-CoGS Cost of Goods Sold Cost of sales
------------------------------------------------------------------------------------------------
EBITDA Earnings before I+T+D+A Gross margin, Gross profit, operating
margin
- Depreciation
- Amortization
----------------------------------------------------------------------------------------------
EBIT Earnings before I+T Financial items, Financial income,
- Financial expense
-----------------------------------------------------------------------------------------------
EBT Earnings before Taxes Pretax net income - Taxes
-------------------------------------------------------------------------------------------------
E Earnings Net income
Profitability Ratio
A class of financial metrics that are used to assess a business's ability to generate earnings
as compared to its expenses and other relevant costs incurred during a specific period of
time. For most of these ratios, having a higher value relative to a competitor's ratio or
the same ratio from a previous period is indicative that the company is doing well.
Some examples of profitability ratios are profit margin, return on assets and return on
equity. It is important to note that a little t of background knowledge is necessary in order
to make relevant comparisons when analyzing these ratios.
For instances, some industries experience seasonality in their operations. The retail
industry, for example, typically experiences higher revenues and earnings for the
Christmas season. Therefore, it would not be too useful to compare a retailer's 4th
quarter profit margin with its 1st quarter profit margin. On the other hand, comparing a
retailer's 4th quarter profit margin with the profit margin from the same period a year
before would be far more informative.
Profit Margin
A ratio of profitability calculated as net income divided by revenues, or net profits
divided by sales. It measures how much out of every dollar of sales a company actually
keeps in earnings.
Profit margin is very useful when comparing companies in similar industries. A higher
profit margin indicates a more profitable company that has better control over its costs
compared to its competitors. Profit margin is displayed as a percentage; a 20% profit
margin, for example, means the company has a net income of $0.20 for each dollar of
sales.
.Looking at the earnings of a company often doesn't tell the entire story. Increased
earnings are good, but an increase does not mean that the profit margin of a company is
improving. For instance, if a company has costs that have increased at a greater rate than
sales, it leads to a lower profit margin. This is an indication that costs need to be under
better control.
Imagine a company has a net income of $10 million from sales of $100 million, giving it
a profit margin of 10% ($10 million/$100 million). If in the next year net income rose to
$15 million on sales of $200 million, its profit margin would fall to 7.5%. So while the
company increased its net income, it has done so with diminishing profit margins.
Gross profit ratio:
Gross Profit ratio is one of the most commonly used ratios. It reveals the result of trading
operations of business. In other words, it indicates to us the profitability of the core
activity of the business.
Gross profit
Net sales
Net profit ratio:
It indicates the result of overall operations of the firm. The higher the ratio, the more
profitable is the business.
Net profit after tax
Net sales
Net Profit Margin:
The net profit margin, sometimes known as the trading profit margin measures trading profit
relative to sales revenue. Thus a trading profit margin of 10% means that every 1.00 of sales
revenue generates .10 (10p) in profit before interest and taxes. Some industries tend to have
relatively low margins, which are compensated for by high volumes. Conversely, high margin
industries may be low volume. Higher than average net profit margins for the industry may be an
indicator or good management.
Earnings before interest and tax
Net sales
EXPENSES RATIO:
Expenses Ratios are the ratios that supplement the information given by the operating
ratio. Each of the expenses ratios highlights the relationship between the particular
expenses and net sales. For example, factory expenses ratio is the ratio of factory
expenses to net sales. Any expenditure can be shown as a ratio to sales. All such ratios
fall under the broad head of Expenses ratio.
Operating expenses ratio :
Administrative expenses + Selling expenses
Net sales
Administrative expenses ratio
Administrative expenses
Net sales
Selling expenses ratio :
Selling expenses
Net sales
Operating ratio:
Cost of goods sold + operating expenses
Net sales
Net present value
Net present value (NPV) is a standard method for the financial appraisal of long-term
projects. Used for capital budgeting, and widely throughout economics, it measures the
excess or shortfall of cash flows, in present value (PV) terms, once financing charges are
met. By definition,
Formula
NPV = PVCI-PVCO
The discount rate
Choosing an appropriate discount rate is crucial to the NPV calculation. A good practice
of choosing the discount rate is to decide the rate which the capital needed for the project
could return if invested in an alternative venture. If, for example, the capital required for
Project A can earn five percent elsewhere, use this discount rate in the NPV calculation to
allow a direct comparison to be made between Project A and the alternative. Obviously,
NPV value obtained using variable discount rates with the years of the investment
duration is more reflecting to the real situation than that calculated from a constant
discount rate for the entire investment duration. Refer to the tutorial article written by
Samuel Baker for more detailed relationship between the NPV value and the discount
rate.
For some professional investors, their investment funds are committed to target a
specified rate of return. In such cases, that rate of return should be selected as the
discount rate for the NPV calculation. In this way, a direct comparison can be made
between the profitability of the project and the desired rate of return.
The rate used to discount future cash flows to their present values is a key input of this
process. Most firms have a well defined policy regarding their capital structure. So the
weighted average cost of capital (after tax) is appropriate for use with all projects.
Alternately, higher discount rates can be used for more risky projects. Another method is
to apply higher discount rates to cash flows occurring further along the time span, to
reflect the yield curve premium for long-term debt.
Reinvestment rate
There are assumptions made about what rate of return is realized on cash that is freed-up
before the end of the project. In the NPV model it is assumed to be reinvested at the
discount rate used. This is appropriate in the absence of capital rationing. In the IRR
model, no assumption is made about the reinvestment rate of free cash, which tends to
exaggerate the calculated values. Some people believe that if the firm's reinvestment rate
is higher than the Weighted Average Cost of Capital, it becomes, in effect, an opportunity
cost and should be used as the discount rate.
What NPV tells
With a particular project, if Ct is a positive value, the project is in the status of cash
inflow in the time of t. If Ct is a negative value, the project is in the status of cash outflow
in the time of t. Appropriately risked projects with a positive NPV should be accepted.
This does not necessarily mean that they should be undertaken since NPV at the cost of
capital may not account for opportunity cost, i.e. comparison with other available
investments. In financial theory, if there is a choice between two mutually exclusive
alternatives, the one yielding the higher NPV should be selected. The following sums up
the NPV's various situations.
If... It means... Then...
NPV
> 0
the investment
would add value to
the firm
the project should be accepted
NPV
< 0
the investment
would subtract value
from the firm
the project should be rejected
NPV the investment the project could be accepted because shareholders obtain
= 0
would neither gain
nor lose value for the
firm
required rate of return. This project adds no monetary value.
Decision should be based on other criteria, e.g. strategic
positioning or other factors not explicitly included in the
calculation.
PROFITABILITY INDEX:
The profitability Index is a variant of the NPV method. While NPV states whether
a proposal is viable, the profitable index expresses the cost or benefit relationship
between initial cash outlay and the NPV of the proposal. This approach is very helpful
when one is faced with a choice involving several alternative investments of different
size.
FORMULA:
PVCI / PVCO
THE DECISION RULE:
Under the profitability index method, the decision rule is to Accept the proposal if
its PI is more than 1 and to reject the same if the PI is less than 1. If the PI is equal to 1,
then the firm may be indifferent.
ACCOUNTING RATE OF RETURN:
The ARR is based on the concept of rate of return. It measures the return on a project
with regard to the investment required for the project . The return is measured in terms of
the average profit earned by the project over the duration of the project. The investment
considered for calculation of this ratio is the average amount blocked in the project.
FORMULA:
Average annual profit after tax x 100
Average investment
THE DECISION RULE:
The ARR is compared with a pre-specified rate of return. If the ARR is greater
than the pre-specified rate of return, then the project is accepted. If the ARR is less than
the pre-specified rate, then the project is rejected.
CHAPTER– VII
DATAANALYSIS
& INTERPRETATION
BALANCE SHEET OF ADITYA BIRLA GROUP FOR THE PERIOD OF 2005 TO 2009Balance Sheet
Rs. Cr
Period & months 2008/09 2007/08 2006/07 2005/06 2005/05
SOURCES OF FUNDS
Owned Funds
Equity Share Capital 17.51 15.01 15.01 15.01 15.01
Share Application Money 0 0 0 0 0
Preferential Share Capital 0 31.01 16 16 0
Reserves & Surplus 226.57 170.88 146.25 126.25 111.33
Loan Funds
Secured Loans 142.3 135.63 119.13 103.38 89.4
Unsecured Loans 56.87 55 13.55 17.45 11.29
TOTAL 443.25 407.53 309.93 278.09 227.04
USES OF FUNDS
Fixed Assets
Gross Block 469.23 425.28 349.31 303.71 271.07
Accumulated Depreciation 144.28 129 112.68 96.1 81.71
Less: Revaluation Reserve 0 0 0 0 0
Net Block 324.95 296.28 236.63 207.6 189.36
Capital Work-in-progress 7.43 19.32 18.59 28.78 6.98
Investments 3.01 3 3 3.01 3
Net Current Assets
Current Assets, Loans & Advances 164.19 136.25 92.9 83.64 74.9
Less: Current Liabilities & Provisions 56.58 47.67 41.29 45.2 47.62
Total Net Current Assets 107.61 88.58 51.61 38.45 27.28
Miscellaneous Expenses not written off 0.25 0.34 0.09 0.25 0.42
TOTAL 443.25 407.53 309.93 278.09 227.04PROFIT AND LOSS ACCOUNT OF ADITYA BIRLA GROUOP FOR THE PERIOD OF 2005 TO 2009
Profit and LossRs. crPeriod & months 2008/09 2007/08 2006/07 2005/06 2005/05
INCOMENet Operating Income 235.4 191.12 167.42 140.17 113.53 EXPENSESMaterial Consumption 52.88 43.23 46.09 33.6 28.04Manufacturing Expenses 61.46 51.99 42.95 44.04 33.57Personal Expenses 13.72 10.99 9.04 5.8 4.78Selling Expenses 20.28 12.9 10.25 7.75 7.75Administrative Expenses 11.5 10.58 9.25 10.06 7Capitalized Expenses 0 0 0 0 0 Cost of Sales 159.85 129.69 117.58 101.26 81.12 Reported PBDIT 75.56 61.44 49.84 38.91 32.41 Other Recurring Income 0.53 0.61 0.33 0.39 14.54Adjusted PBDIT 76.08 62.04 50.17 39.31 33.01 Depreciation 22.06 18.24 16.58 14.45 13.09Other Write-offs 0.08 0.18 0.16 0.16 0.27 Adjusted PBIT 53.94 43.62 33.43 24.7 19.65 Financial Expenses 17.78 15.7 14.2 11.59 14.54 Adjusted PBT 36.16 27.93 19.24 13.12 5.11 Tax Charges 6.6 4.23 2.79 2.1 1.37 Adjusted PAT 29.56 23.7 16.45 11.02 3.74Non-recurring Items 0.44 0.12 0 0 0Other Non-cash Adjustments -0.27 0 -0.02 0 0 REPORTED PAT 29.73 23.83 16.43 11.02 3.74PAT % 12.63 12.47 9.81 7.86 3.29COGS TO SALES % 67.91 67.86 70.23 72.24 71.45sum of per&admin&selling expense 45.50 34.47 28.54 23.61 19.53P.S.A.Exp to SALES 19.33 18.04 17.05 16.84 17.20INTEREST TO SALES % 7.55 8.21 8.48 8.27 12.81 NO.OF EQUITY SHARES 5.84 5.00 5.00 5.00 5.00EPS 40.33 38.20 33.46 28.02 22.69NET WORTH 244.08 216.90 177.25 157.26 126.35BOOK VALUE PER SHARE 41.82 43.35 35.43 31.43 25.25P/E RATIODIFF BET RESERVES OF PR YRS 55.69 24.63 20.00 14.92DIVIDEND PAID -25.96 -0.80 -3.57 -3.90 3.74DPS -4.45 -0.16 -0.71 -0.78 0.75DPR -87.32 -3.36 -21.73 -35.39 100.00RETENTION RATIO 187.32 103.36 121.73 135.39 0.00
Table 2 Showing growth rate of cost of goods sold for the period 2005-2009
YEAR COGS TO SALES GROWTH% AVERAGE2005 71.452006 72.24 1.102007 70.23 -2.782008 67.86 -3.382009 67.91 0.07 -1.25
COGS TO SALES
65
66
67
68
69
70
71
72
73
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
Chart 2 Showing growth rates of COGS for the period 2005-09
In the year 2005-09 the cost of goods sold declined for three years 2005-2006 and increased only in 2007.thus the annual cost of sales in every was also decreasing.
Table 1 Showing growth rate of PAT for the period 2005-2009
Chart 1 Showing growth rate of profit after tax for the period 2005-09
In the year 2005 the profit after tax was very high then in year 2005 it declined to a
large extent, then in year 2006 it increased, in 2007 in declined to negative. Thus
there was increase in pat% every year.
2005 2006 2007 2008 20090
2
4
6
8
10
12
14
16
PROFIT AFTER TAX
YEAR
GR
OW
TH
YEAR PAT% GROWTH % AVERAGE
2005 3.29
2005 7.86 138.65
2005 9.81 24.83
2006 14.23 45.04
2007 12.63 -11.27 49.31
Table3 Showing growth rate of Sum of PER, ADMIN & SELLING EXP for the period 2005-09
YEAR
SUM OF PER,ADMINI&SELLING EXP
GROWTH%
AVERAGE
2005 19.53 2006 23.61 20.89 2007 28.54 20.88 2008 34.47 20.78 2009 45.5 32 23.64
Chart 3 Showing growth rate of Sum of PER, ADMIN & SELLING EXP for the period 2005-09
SUM OF PER,ADMIN & SELLING EXP
0
10
20
30
40
50
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
In the year 2005-09 the Sum of personal, administration and selling exp was almost common for three years 2005-2006 and increased only in 2007 by 12%. But annual personal administration and selling exp increased in every year.
Table 4 Showing growth rate of P.S.A EXP for the period 2005-09
YEAR P.S.A.EXP TO SALES
GROWTH%
AVERAGE
2005 17.2 2006 16.84 -2.08 2007 17.05 1.21 2008 18.04 5.8 2009 19.33 7.17 3.02
Chart 4 Showing growth rate of P.S.A EXP for the period 2005-09
PER,SELLING & ADMIN EXP
15.516
16.517
17.518
18.519
19.520
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
The personal selling and administration exp to sales was negative in the first year
2005 then there after there is continuous increase in personal administration and
selling exp on sales.
Table 5 Showing growth rate of interest to sales% for the period 2005-09
YEAR INTEREST TO SALES%
GROWTH%
AVERAGE
2005 12.81 2006 8.27 -35.44 2007 8.48 2.58 2008 8.21 -3.15 2009 7.55 -8.05 -11.02
Chart 5 Showing growth rate of interest to sales% for the period 2005-09
INTEREST TO SALES %
0
2
4
6
8
10
12
14
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From the chart 5, it can be seen that during the period 2005-09 there is gradual
negativity in the growth rate of interest to sales%, but 2005-2006 there is
increasing in the growth rate of interest to sales%.
Table 6 Showing growth rate of NO.OF EQUITY SHARES for the period
2005-09
YEAR NO.OF EQUITY SHARESGROWTH% AVERAGE
2005 5 2006 5 0 2007 5 0 2008 5 0 2009 5.84 16.66 4.16
Chart 6 Showing growth rates of NO.OF EQUITY SHARES for the period 2005-09
NO.OF EQUITY SHARES
4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
6
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From the chart 6, it can be seen that during the period 2005-2006 there is no
increasing in the growth rate of No .Of Equity Shares of the company, but 2006-
2007 it has increased with nearly 17% growth rate.
Table 7 Showing growth rate of EARNING PER SHARE for the period 2005-
09
YEAR EARNING PER SHARE GROWTH% AVERAGE
2005 22.69
2006 28.02 23.47
2007 33.46 19.44
2008 38.2 14.16
2009 40.33 5.58 15.66
Chart 7 Showing growth rate of EARNING PER SHARE for the period 2005-09
EARNINGS PER SHARE
05
1015202530354045
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From the chart 7, it can be seen that during the period 2005-09 there is gradual
decreasing in the growth rate of earning per share of the company.eventhough
there is an increase in the earning per share of the company.
Table 8 Showing growth rate of NET WORTH for the period 2005-09
YEAR NET WORTH GROWTH% AVERAGE
2005 126.35
2006 157.26 24.46
2007 177.25 12.71
2008 216.9 22.37
2009 244.08 12.53 18.02
Chart 8 Showing growth rate of NET WORTH for the period 2005-09
NETWORTH
0
50
100
150
200
250
300
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From the chart 8, it can be seen that during the period 2005-09 there is gradual
increase and decrease in the growth rate of NET WORTH of the company .2005,
2007 it has decreased nearly half of its previous year.
Table 9 Showing growth rate of BOOK VALUE PER SHARE for the period 2005-09
Chart 9 Showing growth rate of BOOK VALUE PER SHARE for the period 2005-09
BOOK VALUE PER SHARE
0
10
20
30
40
50
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
In the year 2005 the book value per share increasing every year and then in the
year 2005 percentage of growth rate is declined double and then year 2006 there
increase in double percentage of growth and sudden fall of growth percentage in
the year 2007 even though there is continuously increase in book value of share of
the company.
YEAR BOOK VALUE PER SHARE GROWTH% AVERAGE
2005 25.25
2006 31.43 24.46
2007 35.43 12.71
2008 43.35 22.37
2009 41.82 -3.54 14
Table 10 Showing growth rate of diff b/w reserves of pr ysr for the period 2005-09
YEAR DIFF B/W RESERVES OF PR YSR GROWTH% AVERAGE
2005
2006 14.92
2007 20 34.05
2008 24.63 23.15
2009 55.69 126.11 61.1
Chart 10 Showing growth rates of diff b/w reserves of pr yrs for the period 2005-09
DIFFERENCE OF RESERES
0
10
20
30
40
50
60
2005 2006 2007 2008
YEAR
GR
OW
TH
In the year 2005 the difference between reserves of pr ysr is increasing every year
and then in the year 2006 percentage of growth rate is decreased and sudden rise of
growth percentage in year 2007.
Table 11 Showing growth rate of DIVIDEND PAID for the period 2005-09
YEAR DIVIDEND PAID GROWTH% AVERAGE
2005 3.74
2006 -3.9 -204.28
2007 -3.57 -8.46
2008 -0.8 -77.59
2009 -25.96 3145 713.67
Chart 11 Showing growth rate of DIVIDEND PAID for the period 2005-09
DIVIDENDS PAID
-30
-25
-20
-15
-10
-5
0
5
10
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
In the year 2005 the dividend paid is decrease and there is also decrease in growth
percentage and every year there is fall of dividend paid, at the same time there is
continuously increase in fall of growth percentage.
Table 12 Showing growth rate of Dividend per share for the period 2005-09
YEAR DPS GROWTH% AVERAGE
2005 0.75
2006 -0.78 -204.28
2007 -0.71 -8.46
2008 -0.16 -77.59
2009 -4.45 2681.69 597.84
Chart 12 Showing growth rate of Dividend per share for the period 2005-09
DIVIDEND PER SHARE
-5
-4
-3
-2
-1
0
1
2
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
In the year 2005 the dividend per share is decrease and there is also decrease in
growth percentage and every year there is fall of dividend per share, at the same
time there is continuously increase in fall of growth percentage
Table 13 Showing growth rate of DPS for the period 2005-09
YEAR DPR GROWTH% AVERAGE
2005 100
2006 -35.39 -135.39
2007 -21.73 -38.6
2008 -3.36 -84.55
2009 -87.32 2501.02 560.62
Chart 13 Showing growth rates of DPS for the period 2005-09
DIVIDEND PAYOUT RATIO
-100
-50
0
50
100
150
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
In the year 2005 the dividend per rate is decrease and there is also decrease in
growth percentage but from 2005 to 2007 there is recover in growth percentage
and finally there is lot of increase in growth percentage of dividend per rate in year
2007.
Table 14 showing growth rate of RENT RATIO for the period 2005-09
YEAR RENT RATIO GROWTH% AVERAGE
2005 0
2006 135.39 #DIV/0!
2007 121.73 -10.09
2008 103.36 -15.09
2009 187.32 81.23 18.68
Chart 14 showing growth rate of RENT RATIO for the period 2005-09
RETENTION RATIO
0
50
100
150
200
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
In the year 2005 the rent ratio is 135.39 and in the year 2005 to 2006 there is
decrease in rent ration along with growth percentage, but in the year 2007 there is
lot of increase in rent ratio along with growth percentage.
Table 1 Showing growth rate of net operating income for the period 2005-09YEAR NET OPERATING INCOME GROWTH% AVERAGE
2005 113.53 0
2006 140.17 23.47
2007 167.42 19.44
2008 191.12 14.16
2009 235.4 23.17 20.06
Chart 1 Showing growth rate of net operating income for the period 2005-09
NET OPERATING INCOME
0
5
10
15
20
25
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From the chart 1, it can be seen that during the period 2005-07 there is a decrease
in the operating profit for first three years and suddenly growth rate increases in
2007. Even though there is an increase in the net operating income, the growth rate
is decreasing. This mean there may be a gradual increase in the operating expenses.
Table 2 Showing growth rate of material consumption for the period 2005-09
YEAR METERIAL CONSUMPTION GROWTH% AVERAGE
2005 28.04 0
2006 33.6 19.83
2007 46.09 37.17
2008 43.23 -6.21
2009 52.88 22.32 18.28
Chart 2 Showing growth rate of material consumption for the period 2005-09
MATERIAL CONSUMPTION
-10
0
10
20
30
40
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 2 it can be seen that during the period from 2005-09 there is gradual
increase in the rate of material consumption but growth rate of the company
declined in the year 2006, also it can be seen that from the period 2005-2005 the
growth rate increased slightly and from the period 2005-2006 the growth rate
plunged to negativity. In the same process there are up’s and down’s in the
material consumption also.
Table 3 Showing growth rates of manufacturing expenses for the period 2005-09
YEAR MANUFACTURING EXPENSES GROWTH% AVERAGE
2005 33.57 0
2006 44.04 31.19
2007 42.95 -2.48
2008 51.99 21.05
2009 61.46 18.22 16.99
Chart 3 Showing growth rates of manufacturing expenses for the period 2005-09
MANUFACTURING EXPENSES
-5
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 3 it can be seen that during the period from 2005-09 the growth rate of
manufacturing expenses have slightly increased, but from the period 2005-2006
has plunged to negativity and then after from the period 2005-2007 the growth rate
has slightly increased and decreased.
Table 4 showing growth rate of personnel expenses for the period 2005-09
YEAR PERSONAL EXPENSES GROWTH% AVERAGE
2005 4.78 0
2006 5.8 21.34
2007 9.04 55.86
2008 10.99 21.57
2009 13.72 24.84 30.9
Chart 4 showing growth rates of personnel expenses for the period 2005-09
PERSONAL EXPENSES
0
10
20
30
40
50
60
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 4 it can be seen that during the period 2005-09 there has been gradual
increase and decrease in the growth rate of personal expenses of the company.
Even though there is an increase in the personnel expenses of the company.
Table 5 Showing growth rate of selling expenses for the period 2005-09
YEAR SELLING EXPENSES GROWTH% AVERAGE
2005 7.75 0
2006 7.75 0
2007 10.25 32.26
2008 12.9 25.85
2009 20.28 57.21 28.83
Chart 5 Showing growth rate of selling expenses for the period 2005-09
SELLING EXPENSES
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 5 it can be seen that during the period 2005-09 there has been gradual
increase and decrease in the growth rate of selling expenses of the company. Even
though there is an increase in the selling expenses of the company.
Table 6 Showing growth rate of administrative expenses for the period 2005-09
YEAR ADMINISTRATIVE EXPENSES GROWTH% AVERAGE
2005 7 0
2006 10.06 43.71
2007 9.25 -8.05
2008 10.58 14.38
2009 11.5 8.7 14.68
Chart 6 Showing growth rates of administrative expenses for the period 2005-09
ADMINISTRATIVE EXPENSES
-20
-10
0
10
20
30
40
50
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 6 it can be seen that during the period 2005-2005 the growth rate of
administrative expenses have slightly increased, and from the period 2005-2005
the growth rate plunged to negativity, and from the period 2005-2006 there has
been slightly increased, and from the period 2006-2007 there has decrease in the
growth rate of the company.
Table 7 Showing growth rate of cost of sales for the period 2005-09
YEAR COST OF SALES GROWTH% AVERAGE
2005 81.12 0
2006 101.26 24.83
2007 117.58 16.12
2008 129.69 10.3
2009 159.85 23.26 18.62
Chart 7 Showing growth rate of cost of sales for the period 2005-09
COST OF SALES
0
5
10
15
20
25
30
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 7 it can be seen that during the period 2005-2006 there has been a
gradual decrease in the growth rate of cost of sales of the company, and from the
period 2006-2007 the growth rate has slightly increased. Even though there is an
increase in the cost of sales of the company.
Table 8 Showing growth rate of reported PBDIT for the period 2005-09
YEAR REPORTED PBDIT GROWTH% AVERAGE
2005 32.41 0
2006 38.91 20.06
2007 49.84 28.09
2008 61.44 23.27
2009 75.56 22.98 23.6
Chart 8 Showing growth rate of reported PBDIT for the period 2005-09
REPORTED PBDIT
0
5
10
15
20
25
30
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 8 it can be seen that during the period 2005-09 there has been gradual
decrease in the growth rate of reported PBDIT of the company, but from the period
2005-2005 the growth rate has slightly increased. Even though there is an increase
in the reported PBDIT of the company.
Table 9 Showing growth rate of other recurring income for the period 2005-09
YEAR OTHER RECORING INCOME GROWTH% AVERAGE
2005 14.54 0
2006 0.39 -97.32
2007 0.33 -15.38
2008 0.61 84.85
2009 0.53 -13.11 -10.24
Chart 9 Showing growth rate of other recurring income for the period 2005-09
OTHER RECORING INCOME
-150
-100
-50
0
50
100
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 9 it can be seen that during the period 2005-09 there has been a
gradual increase in the growth rate of other recurring income of the company.
Table 10 Showing growth rate of adjusted PBDIT for the period 2005-09
YEAR ADJUSTED PBDIT GROWTH% AVERAGE
2005 33.01 0
2006 39.31 19.09
2007 50.17 27.63
2008 62.04 23.66
2009 76.08 22.63 23.25
Chart 10 Showing growth rate of adjusted PBDIT for the period 2005-09
ADJUSTED PBDIT
0
5
10
15
20
25
30
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 10 it can be seen that during the period 2005-2005 there has been
increase in the growth rate of adjusted PBDIT, from the period 2005-2005 there is
slightly increase in the growth rate and from the period 2005-2007 there has been a
gradual decrease in the growth rate of adjusted PBDIT of the company. Even
though there is an increase in the adjusted PBDIT of the company.
Table 11 Showing growth rate of depreciation for the period 2005-09
YEAR DEPRECIATION GROWTH% AVERAGE
2005 13.09 0
2006 14.45 10.39
2007 16.58 14.74
2008 18.24 10.01
2009 22.06 20.94 14.02
Chart 11 Showing growth rate of depreciation for the period 2005-09
DEPRECIATION
0
5
10
15
20
25
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 11 it cab be seen that during the period 2005-09 there has been
gradual decrease and increase in the growth rate of depreciation of the company.
Even though there is an increase in the depreciation of the company.
Table 12 Showing growth rate of other write-offs for the period 2005-2007
YEAR OTHER WRITE-OFFS GROWTH% AVERAGE
2005 0.27 0
2006 0.16 -40.74
2007 0.16 0
2008 0.18 12.5
2009 0.08 -55.56 -20.95
Chart 12 Showing growth rates of other write-offs for the period 2005-09
OTHER WRITE OFFs
-60
-50
-40
-30
-20
-10
0
10
20
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 12 it can be seen that during the period 2005-2005 the growth rate of
other write-offs is negative and is below zero, in the period 2006 the growth rate of
other write-offs has slightly increased, and in the period 2007 the growth rate
plunged to negativity.
Table 13 Showing growth rate of adjusted PAT for the period 2005-09
YEAR ADJUSTED PAT GROWTH% AVERAGE
2005 3.74 0
2006 11.02 194.65
2007 16.45 49.27
2008 23.7 44.07
2009 29.56 24.73 78.18
Chart 13 Showing growth rate of adjusted PAT for the period 2005-09
ADJUSTED PAT
0
50
100
150
200
250
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 13 it can be seen that during the period 2005-2005 the growth rate of
adjusted PAT has slightly increased and during the period 2005-2007 the growth
rate of adjusted PAT has gradually decreased. Even though there is an increase in
the adjusted PAT of the company.
Table 14 Showing growth rate of reported PAT for the period 2005-09
YEAR REPORTED PAT GROWTH% AVERAGE
2005 3.74 0
2006 11.02 194.65
2007 16.43 49.09
2008 23.83 45.04
2009 29.73 24.76 78.39
Chart 14 Showing growth rate of reported PAT for the period 2005-09
REPORTED PAT
0
50
100
150
200
250
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 14 it can be seen that during the period 2005-2006 the growth rate of
reported PAT has slightly increased and during the period 2005-2007 the growth
rate of reported PAT has gradually decreased. Even though there is an increase in
the reported PAT of the company.
Table 15 Showing growth rate of equity divided for the period 2005-09
YEAR EQUITY DIVIDEND GROWTH% AVERAGE
2005 1.5 0
2006 1.5 0
2007 2.25 50
2008 3 33.33
2009 3.5 16.67 25
Chart 15 Showing growth rate of equity divided for the period 2005-09
EUITY DIVIDENDS
0
10
20
30
40
50
60
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 15 it can be seen that during the period 2005-2006 the growth rate of
equity dividend has zero value, during the period 2005-2009 the growth rate of
equity dividend has slightly increased and during the period 2005-2007 the growth
rate of equity dividend has gradually decreased.Eventhough there is an increase in
Equity Dividend.
Table 16 Showing growth rate of Retained Earnings for the period 2005-09
YEAR RETAINED EARNINGS GROWTH% AVERAGE
2005 111.33 0
2006 126.25 13.4
2007 146.25 15.84
2008 170.88 16.84
2009 226.57 32.59 19.67
Chart 16 Showing growth rates of Retained Earnings for the period 2005-09
RETAINED EARNINGS
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009
YEAR
GR
OW
TH
From chart 16 it can be seen that during the period 2005-09 growth rate of retained
earnings have increased continuously, from 2005-06 there is normal increase in
growth % but in the last year in has increased almost double. Thus it shows that the
earning potential of company has increased a lot in the last year.
Reported PAT 78.39 29.73 53.03 94.6 168.75 301.03
FORECASTED PROFIT&LOSS ACCOUNT FOR THE NEXT FOUR YEARS 2008-2011
Period & months 2008 2009 2010 2011
INCOME
Net operating income 282.62 339.31 407.37 489.09
EXPENSES
Materials consumption 62.55 73.98 87.5 103.5
Manufacturing expenses 71.9 84.11 98.4 115.12
Personnel expenses 17.96 23.5 30.76 40.26
Selling expenses 34.13 43.97 56.64 72.96
Administrative expenses 13.19 15.12 17.34 19.88
Cost of sales 189.61 224.91 266.78 316.45
Reported PBDIT 93.39 115.43 142.67 176.34
Other recurring income 0.48 0.43 0.39 0.35
Adjusted PBDIT 93.77 115.57 142.44 175.55
Depreciation 25.15 28.67 32.69 37.27
Other write-offs 0.06 0.05 0.04 0.03
Adjusted PAT 52.67 93.85 167.22 297.95
Reported PAT 53.03 94.6 168.75 301.03
Table 17 Showing Gross Profit Margin for the period 2008-2011
YAER GROSS PROFIT SALES GROSS PROFIT MARGIN
2008 93.01 189.61 49.05
2009 114.4 224.91 50.86
2010 140.59 266.78 52.70
2011 172.64 316.45 54.56
Chart 17 Showing Gross Profit Margins for the period 2008-2011
GROSS PROFIT MARGIN
46.0047.0048.0049.0050.00
51.0052.0053.0054.0055.00
2008 2009 2010 2011
GROSS PROFITMARGIN
From chart 17 it can be seen during the period 2008-2011 that the gross profit
margin is more or less constant ranging between 49% to 54%. The gross profit
margin of the company is increasing every year.But gross profit margin in last four
has increased less than 10%.
Table 18 Showing operating profit ratio for the period 2008-2011
YEAR EBIT SALES OPERATING PROFIT RATIO
2008 68.62 189.61 36.19
2009 86.9 224.91 38.64
2010 109.75 266.78 41.14
2011 138.28 316.45 43.70
Chart 18 Showing operating profit ratio for the period 2008-2011
OPERATING PROFIT RATIO
0.00
10.00
20.00
30.00
40.00
50.00
2008 2009 2010 2011
OPERATING PROFITRATIO
From chart 18 it can be seen that during the period 2008-2011 the operating profit
of the company is increasing constantly. It can be said that this ratio can be
accepted by the company.
TABLE 19 Showing Net Operating Ratio for the period 2008-2011
YEAR ADJUSTED EAT SALES NET OPERATING RATIO
2008 52.67 189.61 27.78
2009 93.85 224.91 41.73
2010 167.22 266.78 62.68
2011 297.95 316.45 94.15
Chart 19 Showing Net Operating Ratio for the period 2008-2011
NET OPERATING RATIO
0.00
20.00
40.00
60.00
80.00
100.00
2008 2009 2010 2011
NET OPERATING RATIO
From chart 19 it can be seen that during the period 2008-2010 the net operating
ratio of the company is increasing with a difference of 20% but from the period
2009-2010 the net operating ratio has increased with a difference of nearly
35% .Which is almost doubled with compared to previous years.
Table 20 Showing Net Operating Income for the period 2008-2011
YEAR REPORTED EAT SALES NET OPERATING RATIO
2008 53.03 189.61 27.97
2009 94.6 224.91 42.06
2010 168.75 266.78 63.25
2011 301.03 316.45 95.13
Chart 20 Showing Net Operating Income for the period 2008-2011
NET OPERATING RATIO
0.00
20.00
40.00
60.00
80.00
100.00
2008 2009 2010 2011
NET OPERATING RATIO
From chart 20 it can be seen that during the period 2009-2010 the net operating
ratio of the company is increasing with a difference of 20% but from the period
2010-2011 the net operating ratio has increased with a difference of nearly
33%.Which is almost doubled while compared to previous years.
Table 21 Showing Operating Expenses Ratio for the period 2008-2011YEAR
ADMINISTRATIVE SELLINGEXPENSES TOTAL SALES OPERATING
EXPENSES RATIO
EXPENSES
2008 13.19 34.13 47.32 189.61 24.96
2009 15.12 43.97 59.09 224.91 26.27
2010 17.34 56.64 73.98 266.78 27.73
2011 19.88 72.96 92.84 316.45 29.34
Chart 21 Showing Operating Expenses Ratio for the period 2008-2011
OPERATING EXPENSES RATIO
22.00
23.00
24.00
25.00
26.00
27.00
28.00
29.00
30.00
2008 2009 2010 2011
OPERATINGEXPENSES RATIO
From chart 21 it can be seen that operating expenses ratio of the company is
increasing constantly. There is slowing incremental in the operating expenses ratio.
Table 22 Showing Administrative Expenses ratio for the period 2008-2011
YEARADMINISTRATIVE EXPENSES SALES ADMINISTRATIVE EXP RATIO
2008 13.19 189.61 6.96
2009 15.12 224.91 6.72
2010 17.34 266.78 6.50
2011 19.88 316.45 6.28
Chart 22 Showing Administrative Expenses ratio for the period 2008-2011
ADMINISTRATIVE EXP RATIO
5.80
6.00
6.20
6.40
6.60
6.80
7.00
7.20
2008 2009 2010 2011
ADMINISTRATIVE EXPRATIO
From chart 22 it can be seen that during the period 2008-2011 the administrative
expenses of the company are decreasing gradually. The administrative expenses
may not be accepted by the company
Table 23 Showing Selling Expenses ratio for the period 2008-2011
YEAR SELLING EXPENSES SALES SELLING EXPENSES RATIO
2008 34.13 189.61 18.00
2009 43.97 224.91 19.55
2010 56.64 266.78 21.23
2011 72.96 316.45 23.06
Chart 23 Showing Selling Expenses ratio for the period 2008-2011
SELLING EXPENSES RATIO
0.00
5.00
10.00
15.00
20.00
25.00
2008 2009 2010 2011
SELLING EXPENSESRATIO
From chart 23 it can be seen that during the period 2008-2011 the selling expenses
of the company are increasing gradually with more or less a difference of nearly
2.The selling expenses ratio can be accepted by the company.
Table 24 Showing Operating Ratio for the period 2008-2011
YEAR OPERATING EXPENSES SALES OPERATING RATIO
2008 199.73 189.61 105.34
2009 240.68 224.91 107.01
2010 290.64 266.78 108.94
2011 351.72 316.45 111.15
Chart 24 Showing Operating Ratio for the period 2008-2011
OPERATING RATIO
102.00103.00104.00105.00106.00107.00108.00109.00110.00111.00112.00
2008 2009 2010 2011
OPERATING RATIO
From chart 24T it can be seen that during the period 2008-2010 the operating ratio
of the company is increasing gradually. With in four years the operating ratio has
increased from 105 to 111. Which is a very healthy sign.
PROFIT AND LOSS ACCOUNT
Profit and LossRs. crPeriod & months 2009/08 2008/07 2007/06 2006/05 2005/04INCOMENet Operating Income 235.4 191.12 167.42 140.17 113.53 EXPENSESMaterial Consumption 52.88 43.23 46.09 33.6 28.04Manufacturing Expenses 61.46 51.99 42.95 44.04 33.57Personal Expenses 13.72 10.99 9.04 5.8 4.78Selling Expenses 20.28 12.9 10.25 7.75 7.75Administrative Expenses 11.5 10.58 9.25 10.06 7Capitalized Expenses 0 0 0 0 0 Cost of Sales 159.85 129.69 117.58 101.26 81.12 Reported PBDIT 75.56 61.44 49.84 38.91 32.41 Other Recurring Income 0.53 0.61 0.33 0.39 14.54Adjusted PBDIT 76.08 62.04 50.17 39.31 33.01 Depreciation 22.06 18.24 16.58 14.45 13.09Other Write-offs 0.08 0.18 0.16 0.16 0.27 Adjusted PBIT 53.94 43.62 33.43 24.7 19.65 Financial Expenses 17.78 15.7 14.2 11.59 14.54 Adjusted PBT 36.16 27.93 19.24 13.12 5.11 Tax Charges 6.6 4.23 2.79 2.1 1.37 Adjusted PAT 29.56 23.7 16.45 11.02 3.74Non-recurring Items 0.44 0.12 0 0 0Other Non-cash Adjustments -0.27 0 -0.02 0 0 REPORTED PAT 29.73 23.83 16.43 11.02 3.74APPROPRIATIONEquity dividend 3.5 3 2.25 1.5 1.5preference dividend 2.06 2.22 1.6 0.59 0retained earnings 26.35 22.06 16.14 12.1 5.44
Table 25 Showing cash inflows for the period 2008-2011
YEAR NET OPERATING INCOME COST OF SALES CASH INFLOWS TOTAL OF CASH INFLOWS
2008 282.62 189.61 77.82 550.05
2009 339.31 224.91 122.52 686.74
2010 407.37 266.78 199.91 874.06
2011 489.09 316.45 335.22 1140.76
GRAND TOTAL 3251.61
CHART 25 Showing cash inflows for the period 2008-2011
CASH INFLOWS
0
200
400
600
800
1000
1200
2008 2009 2010 2011
Series1
PROFITABILITY INDEX
CALCULATION OF PROFITABILITY INDEX
PROFITABILITY INDEX = PVCI/PVCO 3.00
Table 26 Showing Cash Outflows for the period 2008-2011
YEARMATERIAL CONSUMPTION
MANUFACTURING EXPENSES
PERSONEL EXPENSES
SELLING EXPENSES
ADMINISRTATIVE EXPENSES
TOTAL OF CASH OUTFLOWS
2008 62.55 71.9 17.96 34.13 13.19 199.73
2009 73.98 84.11 23.5 43.97 15.12 240.68
2010 87.5 98.4 30.76 56.64 17.34 290.64
2011 103.5 115.12 40.26 72.96 19.88 351.72
GRAND TOTAL 1082.77
Chart 26 Showing Cash Outflows for the period 2008-2011
CASH OUTFLOWS
0
100
200
300
400
2008 2009 2010 2011
TOTAL OF CASHOUTFLOWS
From chart 26 it can be seen that during the period 2008-2011 the cash flows of the
company are increasing in the same manner.
Table 29 showing average rate of return for the period 2008-2011
Calculation of AVERAGE RATE OF RETURN
YEAR PAT
2008 53.03
2009 94.62010 168.75
2011 301.03
TOTAL 617.41
AVERAGE RATE OF RETURN
Average annual profit after tax= ____________________________ *100 Average investments
= 154.3525 / 221.625 *100=69.64
Chart 27 Showing profit after tax for the period 2008-2011
PAT
0
50
100
150
200
250
300
350
2008 2009 2010 2011
PAT
From chart 27 it can be seen that during the period 2008-2009 the earnings after
tax or profit after tax are increasing slowly, but in the year 2011 the earnings after
tax of the company increased to a great extent. In the period 2008-2009 the
earnings after tax increased nearly with forty differences, and in the period 2009-
2010 it increased with seventy two difference, but in the year 2011 it increased
nearly with the difference of hundred. Even though there is an increase in the Profit
after Tax of the company.
CHAPTER– VIII
FINDINGS & SUGGESTIONS
FINDINGS
1. The current ratio is gradually increasing year after year.
2. The cash ratio (or) absolute liquid ratio of the company is not at liquid level
during 2006-2007 it was below standard ratio and increasing during 2007-08
and 2008-2009
3. The liquidity of the company is in a poor condition but it has been improving
in the year 2008-2009 compare to the earlier years.
4. Debtors turnover ratio of the company is in increasing trend during the study
period.
5. The net assets turnover ratio is decreasing from 2008-09. The company is
becoming efficient in asset utilization.
6. The working capital turnover ratio of the company has been increased in 2008-
09 and reduced duly the ie., 2008-09 which shows the company improper
utilization of working capital funds.
SUGGESTIONS:
-The expenses towards salaries, dated and taxes etc., should be reduced so that the net
profit doesn’t fall into negative.
-The cash and Bank Balances should be maintained towards the standards in order to
meet its short term obligations.
-The establishment and administrative expenses are needed to be reduced in order to
improve profitability.
-The company should reduce its current assets position especially debtors, which is
higher so that the net working capital will reduced.
CONCLUSIONS
1. During the period 2005-07 there is a gradual decrease in the operating profit growth rate of the company. Even though there is an increase in the net operating income, the growth rate is decreasing.
2. During the period from 2005-09 there is increase in the rate of material consumption growth rate of the company, also it can be seen that from the period 2005-2005 the growth rate increased slightly and from the period from 2005-2006 the growth rate plunged to negativity.
3. During the period from 2005-09 the growth rate of manufacturing Expenses have slightly increased, but from the period 2005-2005 has plunged to negativity and then after from the period 2005-2006 the Growth rate has slightly increased.
4. During the period 2005-09 the growth rate of personnel expenses has gradually increased & decreased.
5. During the period 2005-09 there has been gradual increase and decrease in the growth rate of selling expenses of the company. Even though there is an increase in the selling expenses.
6. During the period 2005-2005 there has been gradual increase in the growth rate of administrative expenses and from the period 2005-2005 the growth rate plunged to negativity, and from the period 2005-2006 there has been a gradual increase in the growth rate of the company, in 2006-2007 it slightly decreased.
7. During the period 2005-2006 there has been a gradual decrease in the growth rate of cost of sales of the company. Even though there is an increase in the cost of sales. In 2006-2007 there is slight increase in growth rate.
8. During the period 2005-09 there has been gradual decrease and increase in the growth rate of reported PBDIT of the company. Even though there is an increase in the reported PBDIT in 2005-2005 it increased slightly.
9. During the period 2005-09 there has been a gradual increase in the growth rate of other recurring income of the company.
10.During the period 2005-2005 there has been a gradual increase in the growth rate of adjusted PBDIT, from the period 2005-2005 there is slight increase in the growth rate and from period 2005-2007 there is slight decrease in the growth rate of the company. Even though there is an increase in the adjusted PBDIT.
11.During the period 2005-09 there has been gradual decrease and Increase in the growth rate of depreciation of the company. Even though there is an increase in the depreciation of the company.
12.During the period 2005-2005 the growth rate of other write-offs is Negative and is below zero, in the period 2006 the growth rate of other Write-offs has slightly increased.2007 it again was negative.
13.During the period 2005-2005 the growth rate of adjusted PAT has gradually increased and during the period 2005-2007 the growth rate of adjusted PAT has gradually decreased and during the period 2005-2006 the growth rate of adjusted PAT has further decreased.
14.During the period 2005-2005 the growth rate of reported PAT has gradually increased and during the period 2005-2007 the growth rate of reported PAT has gradually decreased.
15. During the period 2005-2005 the growth rate of equity dividend has zero value, during the period 2005-2005 the growth rate of equity dividend has slightly increased and during the period 2005-2007 the growth rate of equity dividend has gradually decreased.Eventhough there is an increase in Equity Dividend.
16. During the period 2005-09 growth rate of retained earnings was in positive value, during the period 2005-2006 the growth rate of retained earnings has decreased.
BIBLIOGRAPHY
1. FINANCIAL MANAGEMENT -KHAN&JAIN
2. SELF ASSESEMENT
3. www.icicidirect.com
4. www.adityabirlagroup.com
5. BUSINESS LINES
6. TIMES OF INDIA
7. ECONOMIC TIMES